Santa Monica City Council
April 8, 2025

2-II.G. PHYSICAL ACCESSIBILITY
The PHA must comply with a variety of regulations pertaining to physical accessibility, including the following:
x PIH 2010-26
x Section 504 of the Rehabilitation Act of 1973
x The Americans with Disabilities Act of 1990
x The Architectural Barriers Act of 1968
x The Fair Housing Act of 1988
The PHA’s policies concerning physical accessibility must be readily available to applicants and participants. They can be found in three key documents:
x This plan describes the key policies that govern the PHA’s responsibilities with regard to physical accessibility.
x Notice PIH 2010-26 summarizes information about pertinent laws and implementing regulations related to non-discrimination and accessibility in federally-funded housing programs.
x The PHA Plan provides information about self-evaluation, needs assessment, and transition plans.

The design, construction, or alteration of PHA facilities must conform to the Uniform Federal Accessibility Standards (UFAS). Newly-constructed facilities must be designed to be readily accessible to and usable by persons with disabilities. Alterations to existing facilities must be accessible to the maximum extent feasible, defined as not imposing an undue financial and administrative burden on the operations of the HCV program.

When issuing a voucher to a family that includes an individual with disabilities, the PHA will include a current list of available accessible units known to the PHA and will assist the family in locating an available accessible unit, if necessary.

In general, owners must permit the family to make reasonable modifications to the unit.

However, the owner is not required to pay for the modification and may require that the unit be restored to its original state at the family’s expense when the family moves.

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2-II.H. DENIAL OR TERMINATION OF ASSISTANCE
A PHA’s decision to deny or terminate the assistance of a family that includes a person with disabilities is subject to consideration of reasonable accommodation [24 CFR 982.552 (2)(iv)].

When applicants with disabilities are denied assistance, the notice of denial must inform them of the PHA’s informal review process and their right to request an informal review. In addition, the notice must inform applicants with disabilities of their right to request reasonable accommodations to participate in the informal review process.

When a participant family’s assistance is terminated, the notice of termination must inform them of the PHA’s informal hearing process and their right to request a hearing and reasonable accommodation.

When reviewing reasonable accommodation requests, the PHA must consider whether any mitigating circumstances can be verified to explain and overcome the problem that led to the PHA’s decision to deny or terminate assistance. If a reasonable accommodation will allow the family to meet the requirements, the PHA must make the accommodation.

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PART III: IMPROVING ACCESS TO SERVICES FOR PERSONS WITH LIMITED

ENGLISH PROFICIENCY (LEP)
2-III.A. OVERVIEW
Language for Limited English Proficiency Persons (LEP) can be a barrier to accessing important benefits or services, understanding and exercising important rights, complying with applicable responsibilities, or understanding other information provided by the programs. In certain circumstances, failure to ensure that LEP persons can effectively participate in or benefit from federally-assisted programs and activities may violate the prohibition under Title VI against discrimination on the basis of national origin. This part incorporates the Notice of Guidance to Federal Assistance Recipients Regarding Title VI Prohibition Affecting Limited English Proficient Persons, published December 19, 2003 in the Federal Register, and “Final Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons; Notice” (Jan. 22, 2007).

The PHA will take affirmative steps to communicate with people who need services or information in a language other than English. These persons will be referred to as Persons with Limited English Proficiency (LEP).

LEP is defined as persons who do not speak English as their primary language and who have a limited ability to read, write, speak or understand English. For the purposes of this administrative plan, LEP persons are applicants and participants, and parents and family members of applicants and participants.

In order to determine the level of access needed by LEP persons, the PHA will balance the following four factors: (1) the number or proportion of LEP persons eligible to be served or likely to be encountered by the Housing Choice Voucher program; (2) the frequency with which LEP persons come into contact with the programs; (3) the nature and importance of the program, activity, or service provided by the programs to people’s lives; and (4) the resources available to the PHA and costs. Balancing these four factors will ensure meaningful access by LEP persons to critical services while not imposing undue burdens on the PHA.

PHA Policy
The PHA has completed the four-factor analysis and developed a written LEP plan which is provided as Exhibit 2-2 at the end of this chapter.

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2-III.B. ORAL INTERPRETATION
The PHA will offer competent interpretation services free of charge, upon request to the LEP person.

PHA Policy
The PHA will utilize a language line for telephone interpreter services.

When exercising the option to conduct remote briefings, informal reviews, or hearings, however, the PHA will coordinate with a remote interpretation service which, when available, uses video conferencing technology rather than voice-only interpretation.

Where feasible, the PHA will train and hire bilingual staff to be available to act as interpreters and translators, will pool resources with other PHAs, and will standardize documents. Where feasible and possible, the PHA will encourage the use of qualified community volunteers if caution is taken to ensure that the volunteers are appropriately trained and that confidentiality concerns regarding individual applicants and tenants are adequately taken into account.

Where LEP persons desire, they will be permitted to use, at their own expense, a qualified interpreter of their own choosing, in place of or as a supplement to the free language services offered by the PHA. The PHA, at its discretion, may choose to use the language services even when LEP persons desire to use an interpreter of their choosing.

The interpreter may be a family member or friend. If the interpreter chosen by the family is a minor, the PHA will not rely on the minor to serve as the interpreter.

The PHA will analyze the various kinds of contacts it has with the public, to assess language needs and decide what reasonable steps should be taken. “Reasonable steps” may not be reasonable where the costs imposed substantially exceed the benefits.

Where feasible and possible, according to its language assistance plan (LAP), the PHA will train and hire bilingual staff to be available to act as interpreters and translators, will pool resources with other PHAs, and will standardize documents.

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2-III.C. WRITTEN TRANSLATION
Translation is the replacement of a written text from one language into an equivalent written text in another language.

PHA Policy
In order to comply with written-translation obligations, the PHA will take the following steps:

The PHA will provide written translations of vital documents for each eligible LEP language group that constitutes 5 percent or 1,000 persons, whichever is less, of the population of persons eligible to be served or likely to be affected or encountered. Translation of other documents, if needed, can be provided orally; or
If there are fewer than 50 persons in a language group that reaches the 5 percent trigger, the PHA does not translate vital written materials, but provides written notice in the primary language of the LEP language group of the right to receive competent oral interpretation of those written materials, free of cost.

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2-III.D. IMPLEMENTATION PLAN
After completing the four-factor analysis and deciding what language assistance services are appropriate, the PHA shall determine whether it is necessary to develop a written implementation plan to address the identified needs of the LEP populations it serves.

If the PHA determines that it is not necessary to develop a written implementation plan, the absence of a written plan does not obviate the underlying obligation to ensure meaningful access by LEP persons to the PHA’s Housing Choice Voucher program and services.

PHA Policy
If it is determined that the PHA serves very few LEP persons, and the PHA has very limited resources, the PHA will not develop a written LEP plan, but will consider alternative ways to articulate in a reasonable manner a plan for providing meaningful access. Entities having significant contact with LEP persons, such as schools, grassroots and faith-based organizations, community groups, and groups working with new immigrants, will be contacted for input into the process.

The PHA has developed a written LEP plan, following these five steps: (1) Identifying LEP individuals who need language assistance; (2) identifying language assistance measures; (3) training staff; (4) providing notice to LEP persons; and (5) monitoring and updating the LEP plan.

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EXHIBIT 2-1: DEFINITION OF A PERSON WITH A DISABILITY UNDER FEDERAL CIVIL RIGHTS LAWS [24 CFR Parts 8.3 and 100.201] A person with a disability, as defined under federal civil rights laws, is any person who:
x Has a physical or mental impairment that substantially limits one or more of the major life activities of an individual, or
x Has a record of such impairment, or
x Is regarded as having such impairment.

The phrase “physical or mental impairment” includes:
x Any physiological disorder or condition, cosmetic or disfigurement, or anatomical loss affecting one or more of the following body systems: neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or x Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term “physical or mental impairment” includes, but is not limited to: such diseases and conditions as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental retardation, emotional illness, drug addiction and alcoholism.
“Major life activities” includes, but is not limited to, caring for oneself, performing manual tasks, walking, seeing, hearing, breathing, learning, and/or working. “Has a record of such impairment” means has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities. “Is regarded as having an impairment” is defined as having a physical or mental impairment that does not substantially limit one or more major life activities but is treated by a public entity (such as the PHA) as constituting such a limitation; has none of the impairments defined in this section but is treated by a public entity as having such an impairment; or has a physical or mental impairment that substantially limits one or more major life activities, only as a result of the attitudes of others toward that impairment.

The definition of a person with disabilities does not include:
x Current illegal drug users
x People whose alcohol use interferes with the rights of others x Persons who objectively pose a direct threat or substantial risk of harm to others that cannot be controlled with a reasonable accommodation under the programs The above definition of disability determines whether an applicant or participant is entitled to any of the protections of federal disability civil rights laws. Thus, a person who does not meet this disability is not entitled to a reasonable accommodation under federal civil rights and fair

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housing laws and regulations.

The HUD definition of a person with a disability is much narrower than the civil rights definition of disability. The HUD definition of a person with a disability is used for purposes of receiving the disabled family preference, the $400 elderly/disabled household deduction, the $480 dependent deduction, the allowance for medical expenses, or the allowance for disability assistance expenses. (Not applicable in all programs)
The definition of a person with a disability for purposes of granting a reasonable accommodation request is much broader than the HUD definition of disability. Many people will not qualify as a disabled person under the programs, yet an accommodation is needed to provide equal opportunity.

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EXHIBIT 2-2: SANTA MONICA HOUSING AUTHORITY

LANGUAGE ASSISTANCE PLAN
I. PLAN STATEMENT
The Santa Monica Housing Authority (SMHA) is committed to promoting adequate and affordable housing, economic opportunity and a suitable living environment free from discrimination. The SMHA has adopted this Language Assistance Plan to ensure that its programs and resources are accessible to persons with Limited English Proficiency (LEP) without discrimination.

The SMHA will provide language assistance to participants/residents who request assistance from the SMHA for their LEP needs and whose primary language constitutes 5% or greater of the population of persons eligible to be served or likely to be affected or encountered. The information in this Plan is based on 2010 Census data and will be updated as updated Census data becomes available.

Limited English Proficient (LEP) persons are those whose proficiency in speaking, reading, writing, or understanding English is such that it would deny or limit their meaningful access to programs and services provided by the SMHA if language assistance were not provided.

II. MEANINGFUL ACCESS: FOUR FACTOR ANALYSIS
The following four factors have been researched and considered in order to develop a Limited English Proficiency Program which ensures meaningful assistance for LEP individuals and families.

A. Factor One: The number or proportion of LEP persons eligible to be served or likely to be encountered by the Housing Choice Voucher Program The service area of the Santa Monica Housing Authority (SMHA) is the City of Santa Monica. The City of Santa Monica has a total population that consists of 77.6% White,

3.9% Black, 9.0% Asian, 0.4% American Indian and Alaska Native and 0.1% Native Hawaiian and Other Pacific Islander as reported in the U.S Bureau of the Census, 2010 Census. 13.1% of the city’s population is of Hispanic or Latino origin. 15,769 (18%) households receive some form of low-income assistance. 11.1% of families received income below that of the poverty level between 2006 and 2010. 11.5% of all residents aged 65 years an older received income below the poverty level. 23% of the population were foreign born and 25.7% of all residents speak a language other than English at home including Spanish, other Indo-European, Asian Pacific Islander languages. Most came to the United States prior to 2000 from Europe, Asia and Latin America. The majority identifies their ancestry as English, German, and Irish.

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B. Factor Two: The frequency with which LEP individuals come into contact with the Housing Choice Voucher Program
x The SMHA administers 1,092 Section 8 Housing Choice Vouchers, 238 Continuum of Care Program Vouchers, and 45 HOME vouchers
x The SMHA provides housing assistance to over 1,800 individuals, seniors, children and persons with disabilities
x The SMHA employees have daily contact with potential applicants, property owners, and participants
C. Factor Three: The nature and importance of the program, activity, or service provided by the program to people’s lives
The SMHA is the largest provider of affordable housing in the City of Santa Monica and provides a critical resource of housing assistance to over 1,800 low income individuals.

D. Factor Four: Resources currently available to participants/residents The SMHA currently makes the following resources available to LEP individuals and families in order to provide meaningful access to SMHA programs and services:
x Bilingual staff in designated positions to provide oral translation services x Program documents translated into Spanish (a participant population of 5% or more who speak a language other than English in the home if that language can be identified)
x HUD website contains LEP documents at
www.hud.gov/offices/fheo/promotingfh/lep.cfm. Additional documents are available throughout the HUD clips Form Library.

III. LANGUAGE ASSISTANCE
The Santa Monica Housing Authority will:

1. List the telephone extension on all notices addressing language assistance.

2. Utilize language identification flashcards to assist limited English proficient individuals to inform staff of the language they are most comfortable using to communicate.

3. Utilize signage in the lobby of the housing authority and on the website informing the public of translation and interpreter service.

4. Inquire as to the need for, and provide qualified interpreter assistance for, all required group meetings (i.e. briefings) at no cost to the participant.

5. Provide translated versions of vital documents to LEP applicants and participants.

6. Provide free interpretation assistance upon request for all other housing authority transactions.

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Interpreters
To the extent that they are available, qualified interpreters will be provided for all group meetings (i.e. briefings) at no cost to the participants, if the assistance is requested at least 2 work days prior to the meeting. Notice announcing the meeting, including appointment letters, will advise individuals of their ability to request assistance in advance of a group meeting.

Interpretation assistance via telephone conferencing will be offered for one-on-one meetings with staff as needed. Friends will be strongly discouraged as interpreters; minor children will not be permitted to act as interpreters.

The City of Santa Monica has a Translation Services List of employees who are proficient in interpreting specific languages.

Translation
While every effort will be made to ensure that all documents translated remain true to the English version, the text of the English version is the official statement and/or policy of the SMHA. Eventual errors in translation may be considered as a mitigating factor in assessing any resulting complications.

The SMHA will make available, upon request or identification of need, any forms that have been translated by the U.S. Department of Housing and Urban Development. The SMHA will also provide written translations (Spanish and other language(s) for participants as indicated by the annual needs assessment) of:

I. Any flier announcing the availability of, and the associated application form for admission to the Programs
II. The statement of Family Obligations
III. Termination notices
IV. Notices advising of the right to request an Informal Review or Informal Hearing Vital Documents
The SMHA will conduct an initial review of its written documents for the purpose of accessing whether any document is vital and requires translation. HUD’s LEP Guidance states that “[v]ital. documents are those that are critical for ensuring meaningful access by beneficiaries or potential beneficiaries generally and LEP persons specifically” [72 Fed. Reg. at 2,736].

Whether a document is important depends on the “importance of the program, information, encounter, or service involved, and the consequences to the LEP person if the information in question is not provided accurately or in a timely manner.” Id. at 2752. A similar review will be conducted to determine if new documents are vital and need translation. The Santa Monica Housing Authority will rely on HUD to translate its own required documents.

Examples of vital documents may include, but are not limited to Personal Declaration, Housing Choice Voucher (HUD-52646), Family Obligations, and Tenant Integrity Certification, and the HUD Tenancy Addendum.

IV. OUTREACH

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The SMHA will post notices of the availability of language assistance services in the front lobby of the Santa Monica Housing Authority, 1901 1685 Main Street, Santa Monica, CA.

Notice regarding the availability of language assistance services will also be posted on the SMHA’s website and will be included in annual recertification packages sent to residents and participants. Outreach will also include advertising waitlist openings in non-English media.

V. TRAINING
The SMHA will provide ongoing training for appropriate staff regarding the LAP policy and procedures. Training will include:
x An overview of the SMHA’s Limited English Proficiency Policy and Procedures. x How and when to use the Santa Monica Housing Authority’s Language Identification Card to identify the language in which the LEP person needs assistance. x How and when to access language services through bilingual staff or Language Line Services.
x How to work with an interpreter.
x Prohibition against requiring or asking LEP person to bring his/her own interpreter. x Cultural sensitivity.
x The potential consequences of having close friends or children act as interpreters.

VI. MONITORING AND RECORDKEEPING
Housing Authority staff will monitor the provision of language assistance services to LEP persons on an ongoing basis to meet with staff to coordinate and facilitate the delivery of language services and address issues related to language services.

SMHA staff will:

1. Monitor the implementation of the Santa Monica Housing Authority’s Language Assistance Plan and update it annually.

2. Track LEP persons served, including the language, type of service and how language services were provided if available.

3. Consult with front line staff to identify emerging languages and changes in the proportion of existing language groups.

4. Ensure compliance with the requirements for providing language assistance services.

5. Assess the language assistance needs of the SMHA on an annual basis by reviewing data on the provision of language services and the prior year’s provision of language assistance services and recommend modifications of the Plan to the Housing Authority Administrator.

6. Monitor the translation of vital documents.

7. Oversee quality control assessment of language services.

Complaints
SMHA employees who receive a report or become aware that a LEP person believes that he/she has not been provided with language assistance services, in accordance with the provisions of the Language Assistance Plan, should report that information to the Commented [YS1]: @Patrick Komesu I updated the address, is the comment still true.

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Housing Authority Administrator in person or via telephone at 310-458-8743.

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Unlimited copies may be made for internal use. Page 3-1 Chapter 3

ELIGIBILITY

INTRODUCTION
The PHA is responsible for ensuring that every individual and family admitted to the programs meet all program eligibility requirements. This includes any individual approved to join the family after the family has been admitted to the program. The family must provide any information needed by the PHA to confirm eligibility and determine the level of the family’s assistance.

To be eligible for the programs:
x The applicant family must:
- Qualify as a family as defined by HUD and the PHA.
- Have income at or below HUD-specified income limits.
- Qualify on the basis of citizenship or the eligible immigrant status of family members. - Provide social security number information for household members as required. - Consent to the PHA’s collection and use of family information as provided for in PHAprovided consent forms. - Not currently be receiving a duplicative subsidy.
- Meet net asset and property ownership restriction requirements. x The PHA must determine that the current or past behavior of household members does not include activities that are prohibited by HUD or the PHA.

This chapter contains three parts:

Part I: Definitions of Family and Household Members. This part contains HUD and PHA definitions of family and household members and explains initial and ongoing eligibility issues related to these members.

Part II: Basic Eligibility Criteria. This part discusses income eligibility, and rules regarding citizenship, social security numbers, and family consent.

Part III: Denial of Assistance. This part covers factors related to an applicant’s past or current conduct (e.g., criminal activity) that can cause the PHA to deny assistance as well as the asset limitation for HCV.

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Unlimited copies may be made for internal use. Page 3-2 PART I: DEFINITIONS OF FAMILY AND HOUSEHOLD MEMBERS
3-I.A. OVERVIEW
Some eligibility criteria and program rules vary depending upon the composition of the family requesting assistance. In addition, some requirements apply to the family as a whole and others apply to individual persons who will live in the assisted unit. This part provides information that is needed to correctly identify family and household members, and to apply HUD's eligibility rules.
3-I.B. FAMILY AND HOUSEHOLD [24 CFR 5.403; FR Notice 02/03/12; Notice PIH 2014-20; and FR Notice 2/14/23]
The terms family and household have different meanings in the HCV program.

Family
To be eligible for assistance, an applicant must qualify as a family. Family as defined by HUD includes, but is not limited to the following, regardless actual or perceived sexual orientation, gender identity, or marital status, a single person, who may be an elderly person, displaced person, disabled person, near-elderly person, or any other single person; an otherwise eligible youth who has attained at least 18 years of age and not more than 24 years of age and who has left foster care, or will leave foster care within 90 days, in accordance with a transition plan described in section 475(5)(H) of the Social Security Act (42 U.S.C. 675(5)(H)), and is homeless or is at risk of becoming homeless at age 16 or older; or a group of persons residing together.

Such group includes but is not limited to a family with or without children (a child who is temporarily away from the home because of placement in foster care is considered a member of the family), an elderly family, a near-elderly family, a disabled family, a displaced family, and the remaining member of a tenant family. The PHA has the discretion to determine if any other group of persons qualifies as a family.

Gender Identity means actual or perceived gender characteristics.

Sexual orientation means homosexuality, heterosexuality, or bisexuality.

PHA Policy
A family also includes two or more individuals who are not related by blood, marriage, adoption, or other operation of law but who either can demonstrate that they have lived together previously or certify that each individual’s income and other resources will be available to meet the needs of the family.

Each family must identify the individuals to be included in the family at the time of application, and must notify the PHA if the family’s composition changes.

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Unlimited copies may be made for internal use. Page 3-3 Upon the PHA’s HOTMA 102/104 compliance date, the above definition of family will be amended to include: An otherwise eligible youth who has attained at least 18 years of age and not more than 24 years of age and who has left foster care, or will leave foster care within 90 days, in accordance with a transition plan described in section 475(5)(H) of the Social Security Act (42 U.S.C. 675(5)(H)), and is homeless or is at risk of becoming homeless at age 16 or older; or a group of persons residing together.

Household
Household is a broader term that includes additional people who, with the PHA’s permission, live in an assisted unit, such as live-in aides, foster children, and foster adults. 3-I.C. FAMILY BREAK-UP AND REMAINING MEMBER OF TENANT FAMILY Family Break-up [24 CFR 982.315; Notice PIH 2017-08]
Except under the following conditions, the PHA has discretion to determine which members of an assisted family continue to receive assistance if the family breaks up:
x If the family breakup results from an occurrence of domestic violence, dating violence, sexual assault, stalking, or human trafficking, the PHA must ensure that the victim retains assistance. (For documentation requirements and policies related to domestic violence, dating violence, sexual assault, stalking, and human trafficking see section 16- IX.D of this plan.)
x In accordance with Notice PIH 2017-08, for HUD–Veterans Affairs Supportive Housing (HUD–VASH) vouchers, when the veteran is the perpetrator of domestic violence, dating violence, sexual assault, stalking, or human trafficking, the victim must continue to be assisted. Upon termination of the perpetrator’s HUD–VASH voucher, the victim should be given a regular HCV if one is available, and the perpetrator’s HUD–VASH voucher should be used to serve another eligible family. If a regular HCV is not available, the victim will continue to use the HUD–VASH voucher, which must be issued to another eligible family upon the voucher’s turnover.
x If a court determines the disposition of property between members of the assisted family, the PHA is bound by the court's determination of which family members continue to receive assistance.

PHA Policy
When a family on the waiting list breaks up into two otherwise eligible families, only one of the new families may retain the original application date. Other former family members may make a new application with a new application date if the waiting list is open.

If a family breaks up into two otherwise eligible families while receiving assistance, only one of the new families will continue to be assisted.

In the absence of a judicial decision-, or an agreement among the original family members, the PHA will determine which family will retain their placement on the

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Unlimited copies may be made for internal use. Page 3-4 waiting list or continue to receive assistance. In making its determinations, the PHA will take into consideration the following factors: (1) the interest of any minor children, including custody arrangements; (2) the interest of any ill, elderly, or disabled family members; (3) the interest of any family member who is the victim of domestic violence, dating violence, sexual assault, stalking, or human trafficking, including a family member who was forced to leave an assisted unit as a result of such actual or threatened abuse; (4) any possible risks to family members as a result of criminal activity; and (5) the recommendations of social service professionals.

Remaining Member of a Tenant Family [24 CFR 5.403]
The HUD definition of family includes the remaining member of a tenant family, which is a member of an assisted family who remains in the unit when other members of the family have left the unit. Household members such as live-in aides, foster children, and foster adults do not qualify as remaining members of a family.

If dependents are the only “remaining members of a tenant family” and there is no family member able to assume the responsibilities of the head of household, see Chapter 6, Section 6- I.B, for the policy on “Caretakers for a Child.”
3-I.D. HEAD OF HOUSEHOLD [24 CFR 5.504(b)]
Head of household means the adult member of the family who is considered the head for purposes of determining income eligibility and rent. The head of household is responsible for ensuring that the family fulfills all of its responsibilities under the program, alone or in conjunction with a cohead or spouse.

PHA Policy
The family may designate any qualified family member as the head of household.

The head of household must have the legal capacity to enter into a lease under state and local law. A minor who is emancipated under state law may be designated as head of household.
3-I.E. SPOUSE, COHEAD, AND OTHER ADULT
A family may have a spouse or cohead, but not both [HUD-50058 IB, p. 13].

Spouse means the marriage partner of the head of household.

PHA Policy
A marriage partner includes the partner in a "common law" marriage as defined in state law.

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Unlimited copies may be made for internal use. Page 3-5 [California Law: California does not recognize common law marriages. However, if a couple meets the requirements for a common law marriage in a state that does recognize common law marriages, and the couple then moves to California, California will recognize the "common law" marriage. For example, if a couple lived in Texas, a state recognizing common law marriage, and met the requirements for a common law marriage, and then moved to California, which does not recognize common law marriage, California will recognize the couple as being married.] The term “spouse” does not apply to friends, roommates, or significant others who are not marriage partners. A minor who is emancipated under state law may be designated as a spouse.

A cohead is an individual in the household who is equally responsible with the head of household for ensuring that the family fulfills all of its responsibilities under the program, but who is not a spouse. A family can have only one cohead.

PHA Policy
Minors who are emancipated under state law may be designated as a cohead.

Other adult means a family member, other than the head, spouse, or cohead, who is 18 years of age or older. Foster adults and live-in aides are not considered other adults. 3-I.F. DEPENDENTS AND MINORS [24 CFR 5.603]
A minor is a member of the family, other than the head of family or spouse, who is under 18 years of age.

A dependent is a family member who is under 18 years of age or a person of any age who is a person with a disability or a full-time student, except that the following persons can never be dependents: the head of household, spouse, cohead, foster children/adults and live-in aides.

Identifying each dependent in the family is important because each dependent qualifies the family for a dependent allowance as described in Chapter 6.

Joint Custody of Dependents
PHA Policy
Dependents that are subject to a joint custody arrangement will be considered a member of the family, if they live with the applicant or participant family 50 percent or more than 50 percent of the time. The PHA considers joint custody to be legal only whereby a court order exists determining primary place of residence of the children.

If the dependent(s) resides in two households, each of which have a housing subsidy, the addition of said dependent(s) will create a Multiple Subsidy error and is not approved without the household submitting a request to the PHA. Failure to report the existence of duplicate housing subsidy assistance is a violation of Family Obligations.

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When appropriate, the Housing Authorities involved may remove the name of the dependent(s) as they change households during the year.

When more than one applicant or participant family is claiming the same dependents as family members, the family with primary custody at the time of the initial examination or reexamination will be able to claim the dependents and receive the dependent allowance/deduction. If there is a dispute about which family should claim them, the PHA will make the determination based on available documents such as court orders, IRS returns showing which family has claimed the child for income tax purposes, and school records.

When more than one applicant or participant family is claiming the same dependents as family members, the family with primary custody at the time of the initial examination or reexamination will be able to claim the dependents. If there is a dispute about which family should claim them, the PHA will make the determination based on available documents such as court orders, IRS returns showing which family has claimed the child for income tax purposes, and school records.
3-I.G. FULL-TIME STUDENT [24 CFR 5.603; HCV GB, p. 5-29] A full-time student (FTS) is a person who is attending school or vocational training on a full-time basis. The time commitment or subject load that is needed to be full-time is defined by the educational institution.

Identifying each FTS is important because: (1) each family member that is an FTS, other than the head, spouse, or cohead, qualifies the family for a dependent allowance, and (2) the earned income of such an FTS is treated differently from the income of other family members as described in Chapter 6-I.D. Earned Income of Full-Time Students. 3-I.H. ELDERLY AND NEAR-ELDERLY PERSONS, AND ELDERLY FAMILY [24 CFR 5.100 and 5.403, FR Notice 02/03/12]
Elderly Persons
An elderly person is a person who is at least 62 years of age.

Near-Elderly Persons
A near-elderly person is a person who is 50-61 years of age.

Elderly Family
An elderly family is one in which the head, spouse, cohead, or sole member is an elderly person.

Identifying elderly families is important because elderly families qualify for the elderly family allowance as described in Chapter 6.

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Persons with Disabilities
Under the HCV program, special rules apply to persons with disabilities and to any family whose head, spouse, or cohead is a person with disabilities. The technical definitions of individual with handicaps and persons with disabilities are provided in Exhibit 3-1 at the end of this chapter.

These definitions are used for a number of purposes including ensuring that persons with disabilities are not discriminated against based upon disability.

As discussed in Chapter 2, the PHA must make all aspects of the HCV program accessible to persons with disabilities and consider reasonable accommodations requested based upon a person’s disability.

Disabled Family
A disabled family is one in which the head, spouse, or cohead is a person with disabilities.

Identifying disabled families is important because these families qualify for the disabled family allowance as described in Chapter 6.

Even though persons with drug or alcohol dependencies are considered persons with disabilities, this does not prevent the PHA from denying assistance for reasons related to alcohol and drug abuse in accordance with policies found in Part III of this chapter, or from terminating assistance in accordance with the policies in Chapter 12. 3-I.J. GUESTS [24 CFR 5.100]
A guest is a person temporarily staying in the unit with the consent of a member of the household who has expressed or implied authority to so consent.

PHA Policy
A guest can remain in the assisted unit no longer than 14 consecutive days or a total of 28 cumulative calendar days during any 12-month period. If the lease agreement conflicts with PHA policy, then lease agreement supersedes PHA policy.

Minor children who are subject to a joint custody arrangement or for whom a family has visitation privileges, that are not included as a family member because they live outside

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A student who was a former member of the household (other than head of household or spouse) who is currently enrolled as a full-time student and attends school away from home may return to the home for school recesses so long as the stay in the unit lasts no more than 14 consecutive days or 24 cumulative days within a 12-month period. Stays more than 14 consecutive days or 24 cumulative days within a 12-month period are subject to an interim reexamination to account for changes in the household composition (see Chapter 11-II.B).

A family may request an exception to this policy for valid reasons (e.g., care of a relative recovering from a medical procedure is expected to last 40 consecutive days). An exception will not be made unless the family can identify and provide documentation of the residence to which the guest will return.
3-I.K. FOSTER CHILDREN AND FOSTER ADULTS [24 CFR 5.603] Prior to the PHA’s HOTMA 102/104 compliance date, the following policy on foster children and foster adults will be used:

Foster adults are usually persons with disabilities, unrelated to the tenant family, who are unable to live alone [24 CFR 5.609].

The term foster child is not specifically defined by the regulations.

Foster children and foster adults who are living with an applicant or who have been approved by the PHA to live with a participant family are considered household members but not family members. The income of foster children/adults is not counted in family annual income, and foster children/adults do not qualify for a dependent deduction [24 CFR 5.603; HUD-50058 IB, p. 13].

PHA Policy
A foster child is a child that is in the legal guardianship or custody of a state, county, or private adoption or foster care agency, yet is cared for by foster parents in their own homes, under some kind of short-term or long-term foster care arrangement with the custodial agency.

A foster child or foster adult may be allowed to reside in the unit if their presence would not result in a violation of HQS space standards according to 24 CFR 982.401.

Children that are temporarily absent from the home as a result of placement in foster care are discussed in Section 3-I.L.

Upon the PHA’s HOTMA 102/104 compliance date, the following will replace the above section on foster children and foster adults:

A foster adult is a member of the household who is 18 years of age or older and meets the definition of a foster adult under state law. In general, a foster adult is a person who is 18 years

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A foster child is a member of the household who meets the definition of a foster child under state law. In general, a foster child is placed with the family by an authorized placement agency (e.g., public child welfare agency) or by judgment, decree, or other order of any court of competent jurisdiction.

Foster children and foster adults who are living with an applicant or who have been approved by the PHA to live with a participant family are considered household members but not family members. The income of foster children/adults is not counted in family annual income, and foster children/adults do not qualify for a dependent deduction [24 CFR 5.603; HUD-50058 IB, p. 13].

PHA Policy
A foster child is a child that is in the legal guardianship or custody of a state, county, or private adoption or foster care agency, yet is cared for by foster parents in their own homes, under a foster care arrangement with the custodial agency.

If a foster child is residing in the unit and their presence would violate HQS standards, the PHA may increase the voucher size to accommodate the additional household member. Children that are temporarily absent from the home as a result of placement in foster care are discussed in Section 3-I.L.

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Individuals may be absent from the family, either temporarily or permanently, for a variety of reasons including educational activities, placement in foster care, employment, illness, incarceration, and court order.

Definitions of Temporarily and Permanently Absent
PHA Policy
Generally, an individual who is or is expected to be absent from the assisted unit for 90 consecutive days or less is considered temporarily absent and continues to be considered a family member. An individual who is or is expected to be absent from the assisted unit for more than 90 consecutive days is considered permanently absent and no longer a family member. Exceptions to this general policy are discussed below.

Absent Students
PHA Policy
When a student who has been considered a former member of the household attends school away from home, the person will not be considered a family member unless the head of household notifies the PHA in writing and the PHA determines that the student is returning to the unit as a resident, including those situations where the student has returned as a guest and remained past the authorized guest period and requires an interim reexamination in accordance with Chapter 11-II.B.

Absences Due to Placement in Foster Care [24 CFR 5.403] Children temporarily absent from the home as a result of placement in foster care are considered members of the family.

PHA Policy
If a child has been placed in foster care, the head of household will notify the PHA in writing and provide written verification from the appropriate agency whether and when the child is expected to be returned to the home. If the time period is to be greater than 90 days from the date of removal of the children, the voucher size will be reduced. If the agency confirms that the child has been permanently removed from the home, the child will not be counted as a family member and the voucher size will be adjusted in accordance with the PHA’s subsidy standards if appropriate.

The family head, spouse, or co-head is responsible for keeping the PHA notified of changes in the family composition. If the family head, spouse, or co-head receives verification that the child has been permanently removed from the home, the assisted family must supply the information to the PHA. Failure to supply the information within 10 days is cause for termination of the assisted voucher.

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PHA Policy
An employed head, spouse, or cohead absent from the unit more than 180 consecutive days due to employment will continue to be considered a family member.

Family Members Permanently Confined for Medical Reasons [HCV GB, p. 5-22] If a family member is confined to a nursing home or hospital on a permanent basis, that person is no longer considered a family member and the income of that person is not counted [HCV GB, p. 5-22].

PHA Policy
An individual confined to a nursing home or hospital on a permanent basis is not considered a family member.

The PHA will request verification of the family member’s permanent absence from a responsible medical professional. If the responsible medical professional cannot provide a determination, the person will be considered temporarily absent. If the family certifies that the family member is confined on a permanent basis, they may present, and the PHA will consider, any additional documentation or evidence.

Return of Permanently Absent Family Members
PHA Policy
The head of household must request PHA approval for the return of any adult family members that the PHA previously determined to be permanently absent. The individual is subject to the eligibility and screening requirements discussed elsewhere in this chapter. If this request includes an increase in bedroom size, the PHA will determine whether it has sufficient funding in accordance with the policies in Part VIII of Chapter

16. The lease must be modified to reflect the change in household.

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A live-in aide a person who resides with one or more elderly persons, or near-elderly persons, or persons with disabilities, and who: (1) is determined to be essential to the care and wellbeing of the persons, (2) is not obligated for the support of the persons, and (3) would not be living in the unit except to provide the necessary supportive services [24 CFR 5.403].

The PHA must approve a live-in aide if needed as a reasonable accommodation in accordance with 24 CFR 8, to make the program accessible to and usable by the family member with disabilities.

The income of a live-in aide is not counted in the calculation of annual income for the family [24 CFR 5.609(b)]. Relatives may be approved as live-in aides if they meet all of the criteria defining a live-in aide. Because live-in aides are not family members, a relative who serves as a live-in aide would not be considered a remaining member of a tenant family.

A PHA may only approve one additional bedroom for a live-in aide. Although a live-in aide may have PHA-approved family member/s live with him/her in the assisted unit, no additional bedrooms will be provided for the family members of the live-in aide. The PHA must ensure that housing quality standards (HQS) will not be violated and that there will be no more than two people per bedroom or living/sleeping space in the unit in accordance with 24 CFR §982.401(d)(2)(ii). If the approval of additional family members of a live-in aide would result in the violation of HQS, the additional family members of the live-in aide may not be approved.

PHA Policy
A head of household’sfamily’s request for a live-in aide mayust be made either orally or in writing. The PHA will verify the need for a live-in aide with using a live-in aide request form. Written verification will be required from a knowledgeable professional, such as a doctor, social worker, or case worker unless the disability-related need is apparent or known to the PHA, that a live-in aide is necessary for the care and well being of the elderly or disabled family member. For continued approval, the family may be required to submit a new, written request-subject to PHA verification-at each annual reexamination, and the live-in aide must participate in the annual reexamination appointment.

In addition, the family and live-in aide will be required to complete a Live-In Aide Agreement certification form stating that the live-in aide is (1) not obligated for the support of the person(s) needing the care, and (2) would not be living in the unit except to provide the necessary supportive services.

The PHA will not approve a particular person as a live-in aide, and may withdraw such approval if [24 CFR 982.316(b)]:

The person commits fraud, bribery or any other corrupt or criminal act in connection with any federal housing program;
The person commits drug-related criminal activity or violent criminal activity; or

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The live-in aide services are not required for at least 8 hours a day.

The person will not continually reside in the assisted unit with the disabled family member and use the assisted unit as his/her principal place of residence.

The person is a helper or guest of the participant who comes and goes during the day.

Has been terminated previously from the Section 8 Program due to program non-compliance.

The PHA may deny the addition of a proposed live-in aide to the household if that proposed live-in aide would have been ineligible for the program at initial admission in accordance with Chapter 3, Eligibility, or Chapter 12 Termination of Assistance and Tenancy, of this Administrative Plan.

Eligibility checks will be completed (and documented in the file) for all prospective livein aides (and any family members that will live with them in the assisted unit) and they must meet the same eligibility criteria as a program applicant or participant, excluding income criteria.

The PHA will notify the family of its decision in writing within 15 business days of receiving written third-party verification for a live-in aide.

PHA Policy
Live-in aids are not subject to the Citizenship or Eligible Immigration Status Rule as set forth in Chapter 3-II.B.

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3-II.A. INCOME ELIGIBILITY AND TARGETING
Income Limits
HUD establishes income limits for all areas of the country and publishes them annually in the Federal Register. They are based upon estimates of median family income with adjustments for family size. The income limits are used to determine eligibility for the programs and for income targeting purposes as discussed in this section.

Definitions of the Income Limits [24 CFR 5.603(b)]
Low-income family. A family whose annual income does not exceed 80 percent of the median income for the area, adjusted for family size.

Very low-income family. A family whose annual income does not exceed 50 percent of the median income for the area, adjusted for family size.

Extremely low-income family. A family whose annual income does not exceed 30 percent of the median income for the area, adjusted for family size.

HUD may establish income ceilings higher or lower than 30, 50, or 80 percent of the median income for an area if HUD finds that such variations are necessary because of unusually high or low family incomes.

Using Income Limits for Eligibility [24 CFR 982.201 and Notice PIH 2023-17] Income limits are used for eligibility only at admission. Income eligibility is determined by comparing the annual income of an applicant to the applicable income limits for their family size. Income and net family assets of household members are excluded when determining income eligibility; however, household members are considered for purposes of unit size and subsidy standards. In order to be income eligible, an applicant family must be one of the following:
x A very low-income family
x A low-income family that has been "continuously assisted" under the 1937 Housing Act. A family is considered to be continuously assisted if the family is already receiving assistance under any 1937 Housing Act program at the time the family is admitted to the HCV program [24 CFR 982.4; 24 CFR 982.201(b)]
PHA Policy
The PHA will consider a family to be continuously assisted if the family was leasing a unit under any 1937 Housing Act program within 120 days of the time they were selected from the PHA’s waiting list.
x A low-income family that qualifies for voucher assistance as a non-purchasing household living in HOPE 1 (public housing homeownership), HOPE 2 (multifamily housing

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x A low-income or moderate-income family that is displaced as a result of the prepayment of a mortgage or voluntary termination of a mortgage insurance contract on eligible lowincome housing as defined in 24 CFR 248.101. x A low-income family is eligible for assistance under VASH [FR Notice 8/13/24]. See Chapter 19 of this policy for more information.

HUD permits the PHA to establish additional categories of low-income families that may be determined eligible. The additional categories must be consistent with the PHA plan and the consolidated plans for local governments within the PHA’s jurisdiction.

PHA Policy
The PHA has established the following additional categories of low-income families that may be determined eligible:
o A family physically displaced from a Rental Rehabilitation Development due to physical construction, overcrowding, or change in the use of the unit. o A family assisted under another federal housing program and displaced from that program for reasons beyond their control or because they did not participate in a home ownership program.
o A family living in a HUD-owned project when HUD sells, forecloses or demolishes the project).

Using Income Limits for Targeting [24 CFR 982.201]
At least 75 percent of the families admitted to the PHA's program during a PHA fiscal year must be extremely low-income families. HUD may approve exceptions to this requirement if the PHA demonstrates that it has made all required efforts but has been unable to attract an adequate number of qualified extremely low-income families.

Families continuously assisted under the 1937 Housing Act and families living in eligible lowincome housing that are displaced as a result of prepayment of a mortgage or voluntary termination of a mortgage insurance contract are not counted for income targeting purposes.

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Unlimited copies may be made for internal use. Page 3-16 3-II.B. CITIZENSHIP OR ELIGIBLE IMMIGRATION STATUS [24 CFR 5, Subpart E] Housing assistance is available only to individuals who are U.S. citizens, U.S. nationals (herein referred to as citizens and nationals), or noncitizens that have eligible immigration status. At least one family member must be a citizen, national, or noncitizen with eligible immigration status in order for the family to qualify for any level of assistance.

All applicant families must be notified of the requirement to submit evidence of their citizenship status when they apply. Where feasible, and in accordance with the PHA’s Limited English Proficiency Plan, the notice must be in a language that is understood by the individual if the individual is not proficient in English.

Declaration [24 CFR 5.508]
HUD requires each family member to declare whether the individual is a citizen, a national, or an eligible noncitizen, except those members who elect not to contend that they have eligible immigration status. Those who elect not to contend their status are considered to be ineligible noncitizens. For citizens, nationals and eligible noncitizens the declaration must be signed personally by the head, spouse, cohead, and any other family member 18 or older, and by a parent or guardian for minors. The family must identify in writing any family members who elect not to contend their immigration status (see Ineligible Noncitizens below). No declaration is required for live-in aides, foster children, or foster adults.

In accordance with SMHA’s LEP Plan, a translated version of the declaration of eligible immigration status, and other appropriate language assistance, will be provided to LEP applicants.

U.S. Citizens and Nationals
In general, citizens and nationals are required to submit only a signed declaration as verification of their status. However, HUD regulations permit the PHA to request additional documentation of their status, such as a passport.

PHA Policy
The PHA requires all applicant families to submit verification of their citizenship. All families will be notified of the requirement to submit evidence of their citizenship or legal residency status when they apply. If evidence cannot reasonably be provided by the family, the PHA may accept a signed declaration from all family members as verification of citizenship.

Eligible Noncitizens
In addition to providing a signed declaration, those declaring eligible noncitizen status must sign a verification consent form and cooperate with PHA efforts to verify their immigration status as described in Chapter 7. The documentation required for establishing eligible noncitizen status varies depending upon factors such as the date the person entered the U.S., the conditions under which eligible immigration status has been granted, the person’s age, and the date on which the family began receiving HUD-funded assistance.

Lawful residents of the Marshall Islands, the Federated States of Micronesia, and Palau, together known as the Freely Associated States, or FAS, are eligible for housing assistance

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In accordance with SMHA’s LEP Plan, a translated version of the verification consent form, and other appropriate language assistance, will be provided to LEP applicants who declare eligible noncitizen status.

Ineligible Noncitizens
Those noncitizens who do not wish to contend their immigration status are required to have their names listed on a noncontending family members listing, signed by the head, spouse, or cohead (regardless of citizenship status), indicating their ineligible immigration status. The PHA is not required to verify a family member’s ineligible status and is not required to report an individual’s unlawful presence in the U.S. to the United States Citizenship and Immigration Services (USCIS).

In accordance with SMHA’s LEP Plan, a translated version of the non-contending family members listing, and other appropriate language assistance, will be provided to LEP applicants with household members who do not wish to assert eligible immigration status.

Providing housing assistance to noncitizen students is prohibited [24 CFR 5.522]. This prohibition extends to the noncitizen spouse of a noncitizen student as well as to minor children who accompany or follow to join the noncitizen student. Such prohibition does not extend to the citizen spouse of a noncitizen student or to the children of the citizen spouse and noncitizen student. Such a family is eligible for prorated assistance as a mixed family.

Mixed Families
A family is eligible for assistance as long as at least one member is a citizen, national, or eligible noncitizen. Families that include eligible and ineligible individuals are considered mixed families. Such families will be given notice that their assistance will be prorated, and that they may request a hearing if they contest this determination. See Chapter 6 for a discussion of how rents are prorated, and Chapter 16 for a discussion of informal hearing procedures.

In accordance with SMHA’s LEP Plan, a translated version of the notification of prorated assistance, and other appropriate language assistance, will be provided to LEP applicants with mixed households.

Ineligible Families [24 CFR 5.514(d), (e), and (f)]
A PHA may elect to provide assistance to a family before the verification of the eligibility of the individual or one family member [24 CFR 5.512(b)]. Otherwise, no individual or family may be assisted prior to the affirmative establishment by the PHA that the individual or at least one family member is eligible. Verification of eligibility for this purpose occurs when the individual or family members have submitted documentation to the PHA in accordance with program requirements [24 CFR 5.512(a)].

PHA Policy

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When a PHA determines that an applicant family does not include any citizens, nationals, or eligible noncitizens, following the verification process, the family will be sent a written notice within 15 business days of the determination.

The notice will explain the reasons for the denial of assistance, that the family may be eligible for proration of assistance (if program permits), and will advise the family of its right to request an appeal to the United States Citizenship and Immigration Services (USCIS), or to request an informal hearing with the PHA. The informal hearing with the PHA may be requested in lieu of the USCIS appeal, or at the conclusion of the USCIS appeal process. The notice must also inform the applicant that assistance may not be delayed until the conclusion of the USCIS appeal process, but that it may be delayed pending the completion of the informal hearing process.

In accordance with SMHA’s LEP Plan, a translated version of the notice of denial of assistance, and other appropriate language assistance, will be provided to LEP applicants with mixed households.

Informal hearing procedures are contained in Chapter 16.

Timeframe for Determination of Citizenship Status [24 CFR 5.508(g)] For new occupants joining the assisted family, the PHA must verify status at the first interim or regular reexamination following the person’s occupancy, whichever comes first.

If an individual qualifies for a time extension for the submission of required documents, the PHA must grant such an extension for no more than 30 days [24 CFR 5.508(h)].

Each family member is required to submit evidence of eligible status only one time during continuous occupancy.

PHA Policy
The PHA will verify the citizenship status of applicants at the time other eligibility factors are determined.

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Unlimited copies may be made for internal use. Page 3-19 3-II.C. SOCIAL SECURITY NUMBERS [24 CFR 5.216 and 5.218, Notice PIH 2012-10] The applicant and all members of the applicant’s household age 6 or older must disclose the complete and accurate social security number (SSN) assigned to each household member and the documentation necessary to verify each SSN. If a child under age 6 has been added to an applicant family within 6 months prior to voucher issuance, an otherwise eligible family may be admitted to the program and must disclose and document the child’s SSN within 90 days of the effective date of the initial HAP contract. A detailed discussion of acceptable documentation is provided in Chapter 7.

Note: These requirements do not apply to noncitizens who do not contend eligible immigration status.

In addition, each participant who has not previously disclosed an SSN, must submit their complete and accurate SSN and the documentation required to verify the SSN at the time of the next interim or annual reexamination or recertification. Participants aged 62 or older as of January 31, 2010, whose determination of eligibility was begun after January 31, 2010, are exempt from this requirement and remain exempt even if they move to a new assisted unit.

The PHA must deny assistance to an applicant family if they do not meet the SSN disclosure, documentation and verification, and certification requirements contained in 24 CFR 5.216.

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Unlimited copies may be made for internal use. Page 3-20 3-II.D. FAMILY CONSENT TO RELEASE OF INFORMATION [24 CFR 5.230, HCV GB, p. 5-13] HUD requires that each adult family member, and the head of household, spouse, or cohead, regardless of age, sign form HUD-9886, Authorization for the Release of Information/Privacy Act Notice, the form HUD-52675 Debts Owed to Public Housing Agencies and Terminations, and other consent forms as needed to collect information relevant to the family’s eligibility and level of assistance. Chapter 7 provides detailed information concerning the consent forms and verification requirements. The consent form remains effective until the family is denied assistance, assistance is terminated, or the family provides written notification to revoke consent.

The PHA must deny admission to the program if any member of the applicant family fails to sign and submit the consent forms for obtaining information in accordance with 24 CFR 5, Subparts B and F [24 CFR 982.552(b)(3) and 24CFR 5.232(a)].

Upon the PHA’s HOTMA 102/104 compliance date, the following on revocation of consent is added:

However, this does not apply if the applicant or participant, or any member of their family, revokes their consent with respect to the ability of the PHA to access financial records from financial institutions, unless the PHA establishes a policy that revocation of consent to access financial records will result in denial of admission or termination of assistance or admission [24 CFR 5.232(c)].

PHA Policy
The PHA has established a policy that the family’s revocation of consent to allow the PHA to access records from financial institutions will result in denial of admission.

A translated notice of this consent form, and other appropriate language assistance, should be provided to LEP applicants.

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Unlimited copies may be made for internal use. Page 3-21 3-II.E. STUDENTS ENROLLED IN INSTITUTIONS OF HIGHER EDUCATION [24 CFR 5.612 and FR Notice 4/10/06, FR Notice 9/21/16]
Section 327 of Public Law 109-115 and the implementing regulation at 24 CFR 5.612 established new restrictions on the eligibility of certain students (both part- and full-time) who are enrolled in institutions of higher education.

If a student enrolled at an institution of higher education is under the age of 24, is not a veteran, is not married, does not have a dependent child, and is not a person with disabilities receiving HCV assistance as of November 30, 2005, the student’s eligibility must be examined along with the income eligibility of the student’s parents. In these cases, both the student and the student’s parents must be income eligible for the student to receive HCV assistance. If, however, a student in these circumstances is determined independent from their parents in accordance with PHA policy, the income of the student’s parents will not be considered in determining the student’s eligibility.

The new law does not apply to students who reside with parents who are applying to receive HCV assistance. It is limited to students who are seeking assistance on their own, separately from their parents.

Definitions
In determining whether and how the new eligibility restrictions apply to a student, the PHA will rely on the following definitions [FR Notice 4/10/06, FR Notice 9/21/16].

Dependent Child
In the context of the student eligibility restrictions, dependent child means a dependent child of a student enrolled in an institution of higher education. The dependent child must also meet the definition of dependent in 24 CFR 5.603, which states that the dependent must be a member of the assisted family, other than the head of household or spouse, who is under 18 years of age, or is a person with a disability, or is a full-time student. Foster children and foster adults are not considered dependents.

Independent Student
PHA Policy
The PHA will consider a student “independent” from their parents and the parents’ income will not be considered when determining the student’s eligibility if the following four criteria are all met:

The individual is of legal contract age under state law.

The individual has established a household separate from their parents for at least one year prior to application for occupancy or the individual meets the U.S. Department of Education’s definition of independent student.

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Packet Pg. 478 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 3-22 To be considered an independent student according to the Department of Education, a student must meet one or more of the following criteria:

The individual is at least 24 years old by December 31 of the award year for which aid is sought
The individual is an orphan, in foster care, or a ward of the court, or was an orphan, in foster care, or ward of the court at any time when the individual was 13 years of age or older
The individual is, or was immediately prior to attaining the age of majority, an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the individual’s state of legal residence
The individual is a veteran of the U.S. Armed Forces or is currently serving on active duty in the Armed Forces for other than training purposes
The individual is a graduate or professional student
The individual is married
The individual has one or more legal dependents other than a spouse (for example, dependent children or an elderly dependent parent)
The individual has been verified during the school year in which the application is submitted as either an unaccompanied youth who is a homeless child or youth, or as unaccompanied, at risk of homelessness, and self-supporting by:

A local educational agency homeless liaison
The director of a program funded under subtitle B of title IV of the McKinney-Vento Homeless Assistance Act or a
designee of the director
A financial aid administrator
The individual is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances
The individual was not claimed as a dependent by their parents pursuant to IRS regulations, as demonstrated on the parents’ most recent tax forms or the student’s FAFSA.

The individual provides a certification of the amount of financial assistance that will be provided by their parents. This certification must be signed by the individual providing the support and must be submitted even if no assistance is being provided.

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Unlimited copies may be made for internal use. Page 3-23 If the PHA determines that an individual meets the definition of a vulnerable youth such a determination is all that is necessary to determine that the person is an independent student for the purposes of using only the student’s income for determining eligibility for assistance.

The PHA will verify that a student meets the above criteria in accordance with the policies in Section 7-II.E.

Institution of Higher Education
The PHA will use the statutory definition under section 102 of the Higher Education Act of 1965 to determine whether a student is attending an institution of higher education (see Exhibit 3-2).

Parents
PHA Policy
For purposes of student eligibility restrictions, the definition of parents includes biological or adoptive parents, stepparents (as long as they are currently married to the biological or adoptive parent), and guardians (e.g., grandparents, aunt/uncle, godparents, etc).

Person with Disabilities
The PHA will use the statutory definition under section 3(b) (3)(E) of the 1937 Act to determine whether a student is a person with disabilities (see Exhibit 3-1).

Veteran
PHA Policy
A veteran is a person who served in the active United States military, naval, or air service and who was discharged or released from such service under conditions other than dishonorable. Included in this definition are reservists, who are armed forces personnel on part time duty, and persons who served on the National Guard.

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Unlimited copies may be made for internal use. Page 3-24 Vulnerable Youth
PHA Policy
A vulnerable youth is an individual who meets the U.S. Department of Education’s definition of independent student in paragraphs (b), (c), or (h), as adopted in Section II of FR Notice 9/21/16:

The individual is an orphan, in foster care, or a ward of the court, or was an orphan, in foster care, or ward of the court at any time when the individual was 13 years of age or older
The individual is, or was immediately prior to attaining the age of majority, an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the individual’s state of legal residence The individual has been verified during the school year in which the application is submitted as either an unaccompanied youth who is a homeless child or youth, or as unaccompanied, at risk of homelessness, and self-supporting by:

A local educational agency homeless liaison
The director of a program funded under subtitle B of title IV of the McKinney-Vento Homeless Assistance Act or a designee of the director A financial aid administrator
Determining Student Eligibility
If a student is applying for assistance on their own, apart from their parents, the PHA must determine whether the student is subject to the eligibility restrictions contained in 24 CFR

5.612. If the student is subject to those restrictions, the PHA must ensure that: (1) the student is individually eligible for the program, (2) either the student is independent from their parents or the student’s parents are income eligible for the program, and (3) the “family” with which the student is applying is collectively eligible for the program.

PHA Policy
For any student who is subject to the 5.612 restrictions, the PHA will:

Follow its usual policies in determining whether the student individually and the student’s “family” collectively are eligible for the program Determine whether the student is independent from their parents in accordance with the definition of independent student in this section Follow the policies below, if applicable, in determining whether the student’s parents are income eligible for the program
If the PHA determines that the student, the student’s parents (if applicable), or the student’s “family” is not eligible, the PHA will send a notice of denial in accordance with the policies in Section 3-III.F, and the applicant family will have the right to request an informal review in accordance with the policies in Section 16-III.B.

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PHA Policy
For any student who is subject to the 5.612 restrictions and who does not satisfy the definition of independent student in this section, the PHA will determine the income eligibility of the student’s parents as follows:

If the student’s parents are married and living together, the PHA will obtain a joint income declaration and certification of joint income from the parents.

If the student’s parent is widowed or single, the PHA will obtain an income declaration and certification of income from that parent.

If the student’s parents are divorced or separated, the PHA will obtain an income declaration and certification of income from each parent.

If the student has been living with one of their parents and has not had contact with or does not know where to contact their other parent, the PHA will require the student to submit a certification under penalty of perjury describing the circumstances and stating that the student does not receive financial assistance from the other parent. The PHA will then obtain an income declaration and certification of income from the parent with whom the student has been living or had contact.

In determining the income eligibility of the student’s parents, the PHA will use the income limits for the jurisdiction in which the parents live.

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Unlimited copies may be made for internal use. Page 3-26 3-II.F. EIV SYSTEM SEARCHES [EIV FAQs; EIV System Training 9/30/20; and Notice PIH 2023- 27]
Existing Tenant Search
Prior to admission to the program, the PHA must search for all household members using the EIV Existing Tenant Search module. The PHA must review the reports for any SSA matches involving another PHA or a multifamily entity and follow up on any issues identified. The PHA must provide the family with a copy of the Existing Tenant Search results if requested. At no time may any family member receive duplicative assistance.

If the tenant is a new admission to the PHA, and a match is identified at a multifamily property, the PHA must report the program admission date to the multifamily property and document the notification in the tenant file. The family must provide documentation of move-out from the assisted unit, as applicable.

PHA Policy
The PHA will contact the PHA or owner identified in the report to confirm that the family has moved out of the unit and obtain documentation of current tenancy status, including a form HUD-50058 or 50059, as applicable, showing an end of participation.

The PHA will only approve assistance contingent upon the move-out from the currently occupied assisted unit.

Debts Owed to PHAs and Terminations
All adult household members must sign the form HUD-52675 Debts Owed to Public Housing and Terminations. Prior to admission to the program, the PHA must search for each adult family member in the Debts Owed to PHAs and Terminations module.

If a current or former tenant disputes the information in the module, the tenant should contact the PHA directly in writing to dispute the information and provide any documentation that supports the dispute. If the PHA determines that the disputed information is incorrect, the PHA will update or delete the record from EIV. Former tenants may dispute debt and termination information for a period of up to three years from the end of participation date in the program.

PHA Policy
The PHA will require each adult household member to sign the form HUD-52675 once at the eligibility determination. Any new members added to the household after admission will be required to sign the form HUD-52675 prior to being added to the household.

The PHA will search the Debts Owed to PHAs and Terminations module as part of the eligibility determination for new households and as part of the screening process for any household members added after the household is admitted to the program. If any information on debts or terminations is returned by the search, the PHA will determine if this information warrants a denial in accordance with the policies in Part III of this chapter.

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Unlimited copies may be made for internal use. Page 3-27 EIV Income and Income Validation Tool (IVT) Reports
For each new admission, the PHA is required to review the EIV Income and IVT Reports income information in EIV to confirm and validate family reported income within 120 days of the IMS/PIC submission date of the new admission after the admission information is transmitted to HUD. The PHA must print and maintain copies of the EIV Income and IVT reports in the tenant file and resolve any discrepancies with the family. within 60 days of the EIV Income or IVT report dates.

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Unlimited copies may be made for internal use. Page 3-28 PART III: DENIAL OF ASSISTANCE
3-III.A. OVERVIEW
A family that does not meet the eligibility criteria discussed in Parts I and II, must be denied assistance. A PHA may deny assistance for an applicant because of the family’s action or failure to act as described in 24 CFR 982.552 or 982.553. In this section we will discuss other situations and circumstances in which denial of assistance is mandatory for the PHA, and those in which denial of assistance is optional for the PHA.

While the regulations state that the PHA must prohibit admission for certain types of criminal activity and give the PHA the option to deny for other types of previous criminal history, more recent HUD rules and OGC guidance must also be taken into consideration when determining whether a particular individual’s criminal history merits denial of admission.

When considering any denial of admission, PHAs may not use arrest records as the basis for the denial. Further, HUD does not require the adoption of “One Strike” policies and reminds PHAs of their obligation to safeguard the due process rights of applicants and tenants [Notice PIH 2015-19]. HUD codified this stance on disparate impact and discriminatory effects in a final rule dated March 31, 2023. In doing so, HUD also standardized its long-practiced three-step approach to assessing burdens of proof.

HUD’s Office of General Counsel issued a memo on April 4, 2016, regarding the application of Fair Housing Act standards to the use of criminal records. This memo states that a PHA violates the Fair Housing Act when their policy or practice has an unjustified discriminatory effect, even when the PHA had no intention to discriminate. Where a policy or practice that restricts admission based on criminal history has a disparate impact on a particular race, national origin, or other protected class, that policy or practice is in violation of the Fair Housing Act if it is not necessary to serve a substantial, legitimate, nondiscriminatory interest of the PHA, or if that interest could be served by another practice that has a less discriminatory effect [OGC Memo 4/4/16].

PHAs who impose blanket prohibitions on any person with any conviction record, no matter when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then will be unable to show that such policy or practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest. Even a PHA with a more tailored policy or practice that excludes individuals with only certain types of convictions must still prove that its policy is necessary. To do this, the PHA must show that its policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and property and criminal conduct that does not.

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Unlimited copies may be made for internal use. Page 3-29 Forms of Denial [24 CFR 982.552(a)(2); HCV GB, p. 5-35] Denial of assistance includes any of the following:
x Not placing the family's name on the waiting list
x Denying or withdrawing a voucher
x Not approving a request for tenancy or refusing to enter into a HAP contract x Refusing to process a request for or to provide assistance under portability procedures Prohibited Reasons for Denial of Program Assistance [24 CFR 982.202(b), 24 CFR 5.2005(b)] HUD rules prohibit denial of program assistance to the program based on any of the following criteria:
x Age, disability, race, color, religion, sex, or national origin. (See Chapter 2 for additional information about fair housing and equal opportunity requirements.) x Where a family lives prior to admission to the program x Where the family will live with assistance under the program. Although eligibility is not affected by where the family will live, there may be restrictions on the family's ability to move outside the PHA's jurisdiction under portability (See Chapter 10.) x Whether members of the family are unwed parents, recipients of public assistance, or children born out of wedlock
x Whether the family includes children
x Whether a family decides to participate in a family self-sufficiency program x Whether or not a qualified applicant is or has been a victim of domestic violence, dating violence, sexual assault, stalking, or human trafficking if the applicant is otherwise qualified for assistance (See section 3-III.G.)
x Gender identity, sexual orientation, or marital status [HUD Equal Access Rule, 77 Fed. Reg. 5662 (Feb. 3, 2012]

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Unlimited copies may be made for internal use. Page 3-30 3-III.B. MANDATORY DENIAL OF ASSISTANCE [24 CFR 982.553(a) and 24 CFR 982.552(b)(6)] HUD requires the PHA to deny assistance in the following cases:
x Any member of the household has been evicted from federally assisted housing in the last three years for drug-related criminal activity. HUD permits, but does not require, the PHA to admit an otherwise-eligible family if the household member has completed a PHA-approved drug rehabilitation program or the circumstances which led to eviction no longer exist (e.g., the person involved in the criminal activity no longer lives in the household).

PHA Policy
The PHA will admit an otherwise-eligible family who was evicted from federally assisted housing within the past three years for drug-related criminal activity if the PHA is able to verify that the household member who engaged in the criminal activity has completed a supervised drug rehabilitation program approved by the PHA, or the person who committed the crime, is no longer living in the household. x The PHA determines that any household member is currently engaged in the use of illegal drugs.

PHA Policy
Currently engaged in is defined as any use of illegal drugs during the previous three months.
x The PHA has reasonable cause to believe that any household member’s current use or pattern of use of illegal drugs, or current abuse or pattern of abuse of alcohol, may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents.

PHA Policy
In determining reasonable cause, the PHA will consider all credible evidence, including but not limited to, any record of convictions, arrests, or evictions of household members related to the use of illegal drugs or the abuse of alcohol. A record or records of arrest will not be used as the sole basis of determining reasonable cause. The PHA will also consider evidence from treatment providers or community-based organizations providing services to household members.
x Any household member has ever been convicted of drug-related criminal activity for the production or manufacture of methamphetamine on the premises of federally assisted housing.
x Any household member (14 years of age or older) is subject to a lifetime registration requirement under a state sex offender registration program. x Any member of the family fails to sign and submit consent forms for obtaining information. x The family does not meet the restrictions on net assets and real property ownership as required by 24 CFR 5.618.

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Unlimited copies may be made for internal use. Page 3-31 Medical Marijuana
Based on federal law, new admissions of medical marijuana users are prohibited into the Public Housing and Housing Choice Voucher Programs. The Controlled Substances Act (CSA) lists marijuana as a Schedule I drug, a substance with a very high potential for abuse and no accepted medical use in the United States. The Quality Housing and Work Responsibility Act (QHWRA) of 1998 (42 U.S.C. §13661) requires that PHAs administering the HUD's rental assistance programs establish standards and lease provisions that prohibit admission into the PH and HCV programs based on the illegal use of controlled substances, including state legalized medical marijuana.

PHA Policy
New Admissions: The PHA will not admit any medical marijuana user into the program.

Current Participants who were admitted to the program prior to February 1, 2011, who can demonstrate evidence that a valid medical marijuana card was issued to the participant, as allowed for under California state law, prior to March 14, 2012, shall not be subject to termination for using or possessing medical marijuana. Acceptable documentary evidence shall be a medical marijuana card with an issuance date showing it was issued prior to March 14, 2012. In the event a medical marijuana card does not have issuance date on the card, the participant must provide a copy of the medical marijuana card and additional written documentation that demonstrates the card was issued prior to March 14, 2012.

Nothing in this section shall prohibit termination for violating any lease provision, which may include a prohibition of using or possessing marijuana.

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Unlimited copies may be made for internal use. Page 3-32 Upon the PHA’s HOTMA 102/104 compliance date, the following section on the asset limitation is added. The asset limitation does not apply until the PHA’s HOTMA compliance date.
3-III.C. RESTRICTION ON ASSISTANCE BASED ON ASSETS [24 CFR 5.618] There are two circumstances under which a family is ineligible to receive assistance based on asset ownership.

First, assistance may not be provided to any family if the family’s net assets exceed $100,000 the HUD-published asset limitation amount (adjusted annually by HUD). x This amount is listed in HUD’s current year Inflation-Adjusted Values tables x $100,000 for 2024, $103,200 for 2025
Second, the family has real property that is suitable for occupancy by the family as a residence and the family has:
x A present ownership interest in the real property; and x A legal right to reside in the real property; and
x The effective legal authority to sell (based on state or local laws of the jurisdiction where the property is located) the real property.

The PHA does not have the discretion not to enforce or provide limited enforcement of the asset limitation at admission. However, the real property restriction does not apply in the following circumstances:
x Any property for which the family is receiving assistance for a manufactured home under 24 CFR 982.620 or under the HCV Homeownership program;
x Any property that is jointly owned by a member of the family and at least one nonhousehold member who does not live with the family, if the non-household member resides at the jointly owned property;
x Any family that is offering the property for sale; or x Any person who is a victim of domestic violence, dating violence, sexual assault, or stalking. - When a family asks for an exception because a family member is a victim of domestic violence, dating violence, sexual assault, or stalking, the PHA must comply with all the confidentiality requirements under VAWA. The PHA must accept a self-certification from the family member, and the restrictions on requesting documentation under VAWA apply.

A property is considered suitable for occupancy unless the family demonstrates that it:
x Does not meet the disability-related needs for all members of the family (e.g., physical accessibility requirements, disability-related need for additional bedrooms, proximity to accessible transportation, etc.);

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Unlimited copies may be made for internal use. Page 3-33 x Is not sufficient for the size of the family;
PHA Policy
The PHA defines not sufficient for the size of the family as being overcrowded based on the PHA’s subsidy standards in Chapter 5 of this Administrative Plan. x Is geographically located so as to be a hardship for the family (e.g., the distance or commuting time between the property and the family's place of work or school would be a hardship to the family, as determined by the PHA or owner); PHA Policy
In general, the PHA defines a geographic hardship to include when a family members’ work, school, health care provider, or other necessary service is located an unreasonable distance from the real property or there is a lack of adequate transportation options for the family to access work, school, health care, or other necessary services. The PHA will consider circumstantial details a family faces when determining whether a geographic hardship is present.
x Is not a property that a family may reside in under the state or local laws of the jurisdiction where the property is located.

If a family meets one of the above exceptions, the real property is not automatically excluded from the calculation of net family assets. Unless the real property is specifically excluded from net family assets as described in 24 CFR 5.603 and Chapter 6 of this policy, it will be included in net family assets. If the value of that real property brings the net family assets above $100,000 (as adjusted for inflation)the HUD-published asset limitation amount, the family is out of compliance with the asset limitation.

See Chapter 7 for information on verifying net family assets for purposes of the asset limitation.
3-III.D. OTHER PERMITTED REASONS FOR DENIAL OF ASSISTANCE HUD permits, but does not require, the PHA to deny assistance for the reasons discussed in this section.

Criminal Activity [24 CFR 982.553]
HUD permits, but does not require, the PHA to deny assistance if the PHA determines that any household member is currently engaged in or has engaged in during a reasonable time before the family would receive assistance, certain types of criminal activity.

PHA Policy
If any household member is convicted of any of the following criminal activities, within the past three years, the family will be denied assistance.

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Unlimited copies may be made for internal use. Page 3-34 Drug-related criminal activity, defined by HUD as the illegal manufacture, sale, distribution, or use of a drug, or the possession of a drug with intent to manufacture, sell, distribute or use the drug [24 CFR 5.100]; Violent criminal activity, defined by HUD as any criminal activity that has as one of its elements the use, attempted use, or threatened use of physical force substantial enough to cause, or be reasonably likely to cause, serious bodily injury or property damage [24 CFR 5.100];
Criminal activity that may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents or persons residing in the immediate vicinity; or
Criminal activity that may threaten the health or safety of property owners, management staff, and persons performing contract administration functions or other responsibilities on behalf of the PHA (including a PHA employee or a PHA contractor, subcontractor, or agent).

Immediate vicinity means within the City of Santa Monica.

Evidence of such criminal activity includes, but is not limited to:

Any conviction for drug-related or violent criminal activity within the past three years.

Records of arrests for drug-related or violent criminal activity within the past three years, although a record or records of arrest will not be used as the sole basis for the denial or proof that the applicant engaged in disqualifying criminal activity.

The criminal records collected by the PHA provide a cumulative criminal history for an individual. If a criminal history report is indicative of a potential pattern of violent or predatory criminal activity, the PHA may consider criminal history records that are older than 5 years.

In making its decision to deny assistance, the PHA will consider the factors discussed in Section 3-III.F and 3-III.G. Upon consideration of such factors, the PHA may, on a caseby-case basis, decide not to deny assistance.

Previous Behavior in Assisted Housing [24 CFR 982.552(c)] HUD authorizes the PHA to deny assistance based on the family’s previous behavior in assisted housing:

PHAs are not permitted to deny assistance to a family because the family previously failed to meet its obligations under the Family Self-Sufficiency (FSS) program [24 CFR 984.101(d)].

PHA Policy
The PHA will deny assistance to an applicant family if:

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Unlimited copies may be made for internal use. Page 3-35 The family does not provide information that the PHA or HUD determines is necessary in the administration of the program.

The family does not provide complete and true information to the PHA.

Any family member has been evicted from federally-assisted housing in the last three years.

Any family member has committed fraud, bribery, or any other corrupt or criminal act in connection with any federal housing program.

The family owes rent or other amounts to any PHA in connection with Section 8 or other public housing assistance under the 1937 Act, unless the family repays the full amount of the debt prior to being selected from the waiting list.

If the family has not reimbursed any PHA for amounts the PHA paid to an owner under a HAP contract for rent, damages to the unit, or other amounts owed by the family under the lease, unless the family repays the full amount of the debt prior to being selected from the waiting list.

The family has breached the terms of a repayment agreement entered into with the PHA, unless the family repays the full amount of the debt covered in the repayment agreement prior to being selected from the waiting list.

When denying admission due to family debts as shown in HUD’s EIV system, the PHA will provide the family with a copy of the EIV Debt Owed to PHA and Termination report.

If the family wishes to dispute the information in the report, the family must contact the PHA that entered the information in EIV in writing, explaining why EIV information is disputed. The family must also provide a copy of the letter and all applicable verification to the PHA to support the family’s claim. The PHA will consider the information provided by the family prior to issuing a notice of denial.

A family member has engaged in or threatened violent or abusive behavior toward PHA personnel.

Abusive or violent behavior towards PHA personnel or owner/agent includes verbal as well as physical abuse or violence. Use of racial epithets, or other language, written or oral, that is customarily used to intimidate may be considered abusive or violent behavior.

Threatening refers to oral or written threats or physical gestures that communicate intent to abuse or commit violence.

In making its decision to deny assistance, the PHA will consider the factors discussed in Section 3-III.F and 3-III.G Upon consideration of such factors, the PHA may, on a case-bycase basis, decide not to deny assistance.

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Screening for Eligibility
PHAs are authorized to obtain criminal conviction records from law enforcement agencies to screen applicants for admission to the HCV program. This authority assists the PHA in complying with HUD requirements and PHA policies to deny assistance to applicants who are engaging in or have engaged in certain criminal activities. In order to obtain access to the records the PHA must require every applicant family to submit a consent form signed by each adult household member [24 CFR 5.903].

PHA Policy
The PHA will perform a criminal background check for every incoming adult household member. Criminal background checks will only be performed:

1. At initial admission into the programs in Santa Monica or when porting into Santa Monica from another jurisdiction; AND/OR

2. When the Head of Household is requesting to add a member to their household who is 18 years of age or older.

If the results of the criminal background check indicate that there may be past criminal activity in the last 5 years, but the results are inconclusive, the PHA Administrator or other designated staff person will request an in-person meeting with the household member(s) whose records are in question. The PHA will notify the tenant/household member of his/her decision within 15 business days.

While a PHA has regulatory authority to use criminal conviction records for the purpose of applicant screening for admission, there is no corresponding authority to use these records to check for criminal and illegal drug activity by participants, and therefore, PHAs may not use records for this purpose.

PHAs are required to perform criminal background checks necessary to determine whether any household member is subject to a lifetime registration requirement under a state sex offender program in the state where the housing is located, as well as in any other state where a household member is known to have resided [24 CFR 982.553(a)(2)(i)].

PHA Policy
The PHA will use the National Sex Offender database to screen applicants for admission.

Additionally, PHAs must ask whether the applicant or any member of the applicant’s household who is 14 years of age or older, is subject to a lifetime registered sex offender registration requirement in any state [Notice PIH 2012-28].

If the PHA proposes to deny assistance based on a criminal record or on lifetime sex offender registration information, the PHA must notify the household of the proposed action and must provide the subject of the record and the applicant a copy of the record and an opportunity to dispute the accuracy and relevance of the information prior to a denial of admission. [24 CFR

5.903(f) and 5.905(d)].

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The PHA has no liability or responsibility to the owner for the family’s behavior or suitability for tenancy. The PHA has the authority to conduct additional screening to determine whether an applicant is likely to be a suitable tenant.

PHA Policy
The PHA will not conduct additional screening to determine an applicant family’s suitability for tenancy.

The owner is responsible for screening and selection of the family to occupy the owner’s unit.

The PHA must inform the owner that screening and selection for tenancy is the responsibility of the owner. An owner may consider a family’s history with respect to factors such as: payment of rent and utilities, caring for a unit and premises, respecting the rights of other residents to the peaceful enjoyment of their housing, criminal activity that is a threat to the health, safety or property of others, and compliance with other essential conditions of tenancy.

HUD requires the PHA to provide prospective owners with the family's current and prior address (as shown in PHA records) and the name and address (if known) of the owner at the family's current and prior addresses. HUD permits the PHA to provide owners with additional information, as long as families are notified that the information will be provided, and the same type of information is provided to all owners.

The PHA may not disclose to the owner any confidential information provided to the PHA by the family in response to a PHA request for documentation of domestic violence, sexual assault, dating violence, stalking, or human trafficking, except at the written request or with the written consent of the individual providing the documentation [see 24 CFR 5.2007(a)(4)].

PHA Policy
The PHA will inform owners of their responsibility to screen prospective tenants and will provide owners with the required known name and address information, at the time of the initial inspection or before. The PHA will not provide any additional information to the owner, such as tenancy history or criminal history, etc.

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Evidence [24 CFR 982.553(c)]
PHA Policy
The PHA will use the concept of the preponderance of the evidence as the standard for making all admission decisions.

Preponderance of the evidence is defined as evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.

Preponderance of the evidence may not be determined by the number of witnesses, but by the greater weight of all evidence.

Consideration of Circumstances [24 CFR 982.552(c)(2)]
HUD authorizes the PHA to consider all relevant circumstances when deciding whether to deny assistance based on a family’s past history except in the situations for which denial of assistance is mandatory (see Section 3-III.B).

PHA Policy
The PHA will consider the following facts and circumstances prior to making its decision:

The seriousness of the case, especially with respect to how it would affect other residents’ safety or property.

The effects that denial of assistance may have on other members of the family who were not involved in the action or failure to act.

The extent of participation or culpability of individual family members, including whether the culpable family member is a minor or a person with disabilities, or (as discussed further in section 3-III.H) a victim of domestic violence, dating violence, sexual assault, stalking, or human trafficking.

The length of time since the violation occurred, including the age of the individual at the time on the conduct, as well as the family’s recent history and the likelihood of favorable conduct in the future.

While a record or records of arrest will not be used as the sole basis for denial, an arrest may trigger an investigation to determine whether the applicant actually engaged in disqualifying criminal activity. As part of its investigation, the PHA may obtain the police report associated with the arrest and consider the reported circumstances of the arrest. The PHA may also consider:

Any statements made by witnesses or the applicant not included in the police report
Whether criminal charges were filed
Whether, if filed, criminal charges were abandoned, dismissed, not prosecuted, or ultimately resulted in an acquittal

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Evidence of criminal conduct will be considered if it indicates a demonstrable risk to safety and/or property
In the case of drug or alcohol abuse, whether the culpable household member is participating in or has successfully completed a supervised drug or alcohol rehabilitation program or has otherwise been rehabilitated successfully.

The PHA will require the applicant to submit evidence of the household member’s current participation in or successful completion of a supervised drug or alcohol rehabilitation program, or evidence of otherwise having been rehabilitated successfully.

In the case of debts owed to another PHA, SMHA will reconsider the family’s application for admission if the family either: 1) provides proof that the debt owed to the other PHA was paid in full prior to the date the family was selected for admission, or 2) provides proof that it has paid the debt in full within 15 days of the date the family was notified that its application would be denied due to the debt owed.

Removal of a Family Member's Name from the Application
Should the PHA’s screening process reveal that an applicant’s household includes an individual subject to state lifetime registered sex offender registration; the PHA must offer the family the opportunity to remove the ineligible family member from the household. If the family is unwilling to remove that individual from the household, the PHA must deny admission to the family [Notice PIH 2012-28].

For other criminal activity, the PHA may permit the family to exclude the culpable family members as a condition of eligibility. [24 CFR 982.552(c)(2)(ii)].

PHA Policy
As a condition of receiving assistance, a family may agree to remove the culpable family member from the application. In such instances, the head of household must certify that the family member will not be permitted to visit, stay as a guest, or reside in the assisted unit.

After admission to the program, the family must present evidence of the former family member’s current address upon PHA request.

Reasonable Accommodation [24 CFR 982.552(c)(2)(iv)]

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PHA Policy
If the family indicates that the behavior of a family member with a disability is the reason for the proposed denial of assistance, the PHA will determine whether the behavior is related to the disability. If so, upon the family’s request, the PHA will determine whether admitting the family as a reasonable accommodation is appropriate.

The PHA will only consider accommodations that can reasonably be expected to address the behavior that is the basis of the proposed denial of assistance. See Chapter 2 for a discussion of reasonable accommodation.

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If the family is eligible for assistance, the PHA will notify the family in writing and schedule a tenant briefing, as discussed in Chapter 5. Any notification of the family’s eligibility for assistance will be translated in accordance with SMHA’s LEP Plan.

If the PHA determines that a family is not eligible for the program for any reason, the family must be notified promptly. The notice must describe: (1) the reasons for which assistance has been denied, (2) the family’s right to an informal review, and (3) the process for obtaining the informal review [24 CFR 982.554 (a)]. See Chapter 16, for informal review policies and procedures.

PHA Policy
The family will be notified of a decision to deny assistance in writing within 15 business days of the determination.

In accordance with SMHA’s LEP Plan, a translated version of the notification of denial of assistance, and other appropriate language assistance, will be provided to LEP applicants.

If a PHA uses a criminal record or sex offender registration information obtained under 24 CFR 5, Subpart J, as the basis of a denial, a copy of the record must precede the notice to deny, with an opportunity for the applicant to dispute the accuracy and relevance of the information before the PHA can move to deny the application. In addition, a copy of the record must be provided to the subject of the record [24 CFR 5.903(f) and 5.905(d)]. The PHA must give the family an opportunity to dispute the accuracy and relevance of that record, in the informal review process in accordance with program requirements [24 CFR 982.553(d)].

PHA Policy
If based on a criminal record or sex offender registration information, an applicant family appears to be ineligible; the PHA will notify the family in writing of the proposed denial and provide a copy of the record to the applicant and to the subject of the record. The family will be given 10 business days to dispute the accuracy and relevance of the information. If the family does not contact the PHA to dispute the information within that 10-day period, the PHA will proceed with issuing the notice of denial of admission. A family that does not exercise their right to dispute the accuracy of the information prior to issuance of the official denial letter will still be given the opportunity to do so as part of the informal review process.

Notice requirements related to denying assistance to noncitizens are contained in Section 3- II.B.

Notice policies related to denying admission to applicants who may be victims of domestic violence, dating violence, sexual assault, stalking, or human trafficking are contained in Section 3-III.H.

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Unlimited copies may be made for internal use. Page 3-42 3-III.H. PROHIBITION AGAINST DENIAL OF ASSISTANCE TO VICTIMS OF DOMESTIC VIOLENCE,

DATING VIOLENCE, SEXUAL ASSAULT, STALKING, AND HUMAN TRAFFICKING The Violence Against Women Act (VAWA) and the HUD regulation at 24 CFR 5.2005(b) prohibit PHAs from denying an applicant admission to programs on the basis or as a direct result of the fact that the applicant is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, if the applicant otherwise qualifies for assistance or admission. x Although the VAWA 2022 statute does not specifically include human trafficking in the list of victims protected under VAWA, in 2022 HUD began including human trafficking as part of the list of victims protected under VAWA (as seen in Notices PIH 2022-06, PIH 2022-22, and PIH 2022-24). In the absence of a final rule implementing VAWA 2022 and to mirror HUD’s recent usage, this policy includes human trafficking in addition to domestic violence, dating violence, sexual assault, and stalking anywhere such a list appears.

Definitions of key terms used in VAWA are provided in section 16-IX of this plan, where general VAWA requirements and policies pertaining to notification, documentation, and confidentiality are also located.

Notification
VAWA requires PHAs to provide applicants who are denied assistance with a VAWA Notice of Occupancy Rights (form HUD-5380) and a domestic violence certification form (HUD-5382) at the time the applicant is denied.

PHA Policy
The PHA acknowledges that a victim of domestic violence, dating violence, sexual assault, stalking, or human trafficking may have an unfavorable history (e.g., a poor credit history, poor rental history, a record of previous damage to an apartment, a prior arrest record) due to adverse factors that would warrant denial under the PHA’s policies.

While the PHA is not required to identify whether adverse factors that resulted in the applicant’s denial are a result of domestic violence, dating violence, sexual assault, stalking, or human trafficking, the applicant may inform the PHA that their status as a victim is directly related to the grounds for the denial. The PHA will request that the applicant provide enough information to the PHA to allow the PHA to make an objectively reasonable determination, based on all circumstances, whether the adverse factor is a direct result of their status as a victim.

The PHA will include in its notice of denial the VAWA information described in section 16-IX.C of this plan as well as including a copy of the form HUD-5382. The PHA will request in writing that an applicant wishing to claim protection under VAWA notify the PHA within 14 business days. Should SMHA make a written request to an applicant seeking to assert VAWA protections, SMHA will provide a translated copy of this request, and provide other appropriate language assistance, in accordance with the SMHA LEP Plan.

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Victim Documentation
PHA Policy
If an applicant claims the protection against denial of assistance that VAWA provides to victims of domestic violence, dating violence, sexual assault, stalking, or human trafficking, the PHA will request in writing that the applicant provide documentation supporting the claim in accordance with section 16-IX.D of this plan. Should SMHA make a written request to an applicant seeking to assert VAWA protections, SMHA will provide a translated copy of this request, and provide other appropriate language assistance, in accordance with the SMHA LEP Plan.

Perpetrator Documentation
PHA Policy
If the perpetrator of the abuse is a member of the applicant family, the applicant must provide additional documentation consisting of one of the following:

A signed statement (1) requesting that the perpetrator be removed from the application and (2) certifying that the perpetrator will not be permitted to visit or to stay as a guest in the assisted unit.

Documentation that the perpetrator has successfully completed, or is successfully undergoing, rehabilitation or treatment. The documentation must be signed by an employee or agent of a domestic violence service provider or by a medical or other knowledgeable professional from whom the perpetrator has sought or is receiving assistance in addressing the abuse. The signer must attest under penalty of perjury to their belief that the rehabilitation was successfully completed or is progressing successfully. The victim and perpetrator must also sign or attest to the documentation.

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Unlimited copies may be made for internal use. Page 3-44 EXHIBIT 3-1: DETAILED DEFINITIONS RELATED TO DISABILITIES Person with Disabilities [24 CFR 5.403]
The term person with disabilities means a person who has any of the following types of conditions:
x Has a disability, as defined in 42 U.S.C. Section 423(d)(1)(A), which reads:

Inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months; or
In the case of an individual who has attained the age of 55 and is blind (within the meaning of “blindness” as defined in section 416(i)(1) of this title), inability by reason of such blindness to engage in substantial gainful activity, requiring skills or ability comparable to those of any gainful activity in which he has previously engaged with some regularity and over a substantial period of time.
x Has a developmental disability as defined in the Developmental Disabilities Assistance and Bill of Rights Act of 2000 [42 U.S.C.15002(8)], which defines developmental disability in functional terms as follows:
(A) In General
The term “developmental disability” means a severe, chronic disability of an individual that:
(i) is attributable to a mental or physical impairment or combination of mental and physical impairments;
(ii) is manifested before the individual attains age 22; (iii) is likely to continue indefinitely;
(iv) results in substantial functional limitations in 3 or more of the following areas of major life activity: (I) Self-care, (II) Receptive and expressive language, (III) Learning, (IV) Mobility, (V) Self-direction, (VI) Capacity for independent living, (VII) Economic self-sufficiency; and
(v) reflects the individual’s need for a combination and sequence of special, interdisciplinary, or generic services, individualized supports, or other forms of assistance that are of lifelong or extended duration and are individually planned and coordinated.
(B) Infants and Young Children
An individual from birth to age 9, inclusive, who has a substantial developmental delay or specific congenital or acquired condition, may be considered to have a developmental disability without meeting 3 or more of the criteria described in clauses

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Unlimited copies may be made for internal use. Page 3-45 (i) through (v) of subparagraph (A) if the individual, without services and supports, has a high probability of meeting those criteria later in life. x Has a physical, mental, or emotional impairment that is expected to be of long-continued and indefinite duration; substantially impedes their ability to live independently and is of such a nature that the ability to live independently could be improved by more suitable housing conditions.

People with the acquired immunodeficiency syndrome (AIDS) or any conditions arising from the etiologic agent for AIDS are not excluded from this definition.

A person whose disability is based solely on any drug or alcohol dependence does not qualify as a person with disabilities for the purposes of this program.

For purposes of reasonable accommodation and program accessibility for persons with disabilities, the term person with disabilities refers to an individual with handicaps.

Individual with Handicaps [24 CFR 8.3]
Individual with handicaps means any person who has a physical or mental impairment that substantially limits one or more major life activities; has a record of such impairment; or is regarded as having such impairment. The term does not include any individual who is an alcoholic or drug abuser whose current use of alcohol or drugs prevents the individual from participating in the program or activity in question, or whose participation, by reason of such current alcohol or drug abuse, would constitute a direct threat to property or the safety of others. As used in this definition, the phrase:
(1) Physical or mental impairment includes:
(a) Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or (b) Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term physical or mental impairment includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental retardation, emotional illness, drug addiction and alcoholism. (2) Major life activities mean functions such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning and working. (3) Has a record of such an impairment means has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities.
(4) Is regarded as having an impairment means:

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Unlimited copies may be made for internal use. Page 3-46 (a) Has a physical or mental impairment that does not substantially limit one or more major life activities but that is treated by a recipient as constituting such a limitation; (b) Has a physical or mental impairment that substantially limits one or more major life activities only as a result of the attitudes of others toward such impairment; or (c) Has none of the impairments defined in paragraph (1) of this section but is treated by a recipient as having such an impairment.

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Unlimited copies may be made for internal use. Page 3-47 EXHIBIT 3-2: DEFINITION OF INSTITUTION OF HIGHER EDUCATION [20 U.S.C. 1001 and 1002]
Eligibility of Students for Assisted Housing Under Section 8 of the U.S. Housing Act of 1937; Supplementary Guidance; Notice [Federal Register, April 10, 2006] Institution of Higher Education shall have the meaning given this term in the Higher Education Act of 1965 in 20 U.S.C. 1001 and 1002.

Definition of ‘‘Institution of Higher Education’’ From 20 U.S.C. 1001 (a) Institution of higher education. For purposes of this chapter, other than subchapter IV and part C of subchapter I of chapter 34 of Title 42, the term ‘‘institution of higher education’’ means an educational institution in any State that
(1) Admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate; (2) Is legally authorized within such State to provide a program of education beyond secondary education;
(3) Provides an educational program for which the institution awards a bachelor’s degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree;
(4) Is a public or other nonprofit institution; and
(5) Is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted preaccreditation status by such an agency or association that has been recognized by the Secretary for the granting of pre accreditation status, and the Secretary has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.
(b) Additional institutions included. For purposes of this chapter, other than subchapter IV and part C of subchapter I of chapter 34 of Title 42, the term ‘‘institution of higher education’’ also includes—
(1) Any school that provides not less than a 1-year program of training to prepare students for gainful employment in a recognized occupation and that meets the provision of paragraphs (1), (2), (4), and (5) of subsection (a) of this section; and (2) A public or nonprofit private educational institution in any State that, in lieu of the requirement in subsection (a)(1) of this section, admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located.
(c) List of accrediting agencies. For purposes of this section and section 1002 of this title, the Secretary shall publish a list of nationally recognized accrediting agencies or associations

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Definition of ‘‘Institution of Higher Education’’ From 20 U.S.C. 1002 (a) Definition of institution of higher education for purposes of student assistance programs (1) Inclusion of additional institutions. Subject to paragraphs (2) through (4) of this subsection, the term ‘‘institution of higher education’’ for purposes of subchapter IV of this chapter and part C of subchapter I of chapter 34 of title 42 includes, in addition to the institutions covered by the definition in section 1001 of this title— (A) A proprietary institution of higher education (as defined in subsection (b) of this section);
(B) A postsecondary vocational institution (as defined in subsection (c) of this section); and
(C) Only for the purposes of part B of subchapter IV of this chapter, an institution outside the United States that is comparable to an institution of higher education as defined in section 1001 of this title and that has been approved by the Secretary for the purpose of part B of subchapter IV of this chapter. (2) Institutions outside the United States
(A) In general. For the purpose of qualifying as an institution under paragraph (1)(C), the Secretary shall establish criteria by regulation for the approval of institutions outside the United States and for the determination that such institutions are comparable to an institution of higher education as defined in section 1001 of this title (except that a graduate medical school, or a veterinary school, located outside the United States shall not be required to meet the requirements of section 1001 (a)(4) of this title).

Such criteria shall include a requirement that a student attending such school outside the United States is ineligible for loans made, insured, or guaranteed under part B of subchapter IV of this chapter unless—
(i) In the case of a graduate medical school located outside the United States— (I)(aa) At least 60 percent of those enrolled in, and at least 60 percent of the graduates of, the graduate medical school outside the United States were not persons described in section 1091(a)(5) of this title in the year preceding the year for which a student is seeking a loan under part B of subchapter IV of this chapter; and
(bb) At least 60 percent of the individuals who were students or graduates of the graduate medical school outside the United States or Canada (both nationals of the United States and others) taking the examinations administered by the Educational Commission for Foreign Medical Graduates received a passing score in the year preceding the year for which a student is seeking a loan under part B of subchapter IV of this chapter; or

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Unlimited copies may be made for internal use. Page 3-49 (II) The institution has a clinical training program that was approved by a State as of January 1, 1992; or
(ii) In the case of a veterinary school located outside the United States that does not meet the requirements of section 1001(a)(4) of this title, the institution’s students complete their clinical training at an approved veterinary school located in the United States.
(B) Advisory panel
(i) In general. For the purpose of qualifying as an institution under paragraph (1)(C) of this subsection, the Secretary shall establish an advisory panel of medical experts that shall—
(I) Evaluate the standards of accreditation applied to applicant foreign medical schools; and
(II) Determine the comparability of those standards to standards for accreditation applied to United States medical schools. (ii) Special rule if the accreditation standards described in clause (i) are determined not to be comparable, the foreign medical school shall be required to meet the requirements of section 1001 of this title.
(C) Failure to release information. The failure of an institution outside the United States to provide, release, or authorize release to the Secretary of such information as may be required by subparagraph (A) shall render such institution ineligible for the purpose of part B of subchapter IV of this chapter.
(D) Special rule. If, pursuant to this paragraph, an institution loses eligibility to participate in the programs under subchapter IV of this chapter and part C of subchapter I of chapter 34 of title 42, then a student enrolled at such institution may, notwithstanding such loss of eligibility, continue to be eligible to receive a loan under part B while attending such institution for the academic year succeeding the academic year in which such loss of eligibility occurred. (3) Limitations based on course of study or enrollment. An institution shall not be considered to meet the definition of an institution of higher education in paragraph (1) if such institution—
(A) Offers more than 50 percent of such institution’s courses by correspondence, unless the institution is an institution that meets the definition in section 2471 (4)(C) of this title;
(B) Enrolls 50 percent or more of the institution’s students in correspondence courses, unless the institution is an institution that meets the definition in such section, except that the Secretary, at the request of such institution, may waive the applicability of this subparagraph to such institution for good cause, as determined by the Secretary in the case of an institution of higher education that provides a 2-or

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Unlimited copies may be made for internal use. Page 3-50 4-year program of instruction (or both) for which the institution awards an associate or baccalaureate degree, respectively;
(C) Has a student enrollment in which more than 25 percent of the students are incarcerated, except that the Secretary may waive the limitation contained in this subparagraph for a nonprofit institution that provides a 2-or 4-year program of instruction (or both) for which the institution awards a bachelor’s degree, or an associate’s degree or a postsecondary diploma, respectively; or (D) Has a student enrollment in which more than 50 percent of the students do not have a secondary school diploma or its recognized equivalent, and does not provide a 2-or 4-year program of instruction (or both) for which the institution awards a bachelor’s degree or an associate’s degree, respectively, except that the Secretary may waive the limitation contained in this subparagraph if a nonprofit institution demonstrates to the satisfaction of the Secretary that the institution exceeds such limitation because the institution serves, through contracts with Federal, State, or local government agencies, significant numbers of students who do not have a secondary school diploma or its recognized equivalent.
(4) Limitations based on management. An institution shall not be considered to meet the definition of an institution of higher education in paragraph (1) if— (A) The institution, or an affiliate of the institution that has the power, by contract or ownership interest, to direct or cause the direction of the management or policies of the institution, has filed for bankruptcy, except that this paragraph shall not apply to a nonprofit institution, the primary function of which is to provide health care educational services (or an affiliate of such an institution that has the power, by contract or ownership interest, to direct or cause the direction of the institution’s management or policies) that files for bankruptcy under chapter 11 of title 11 between July 1, 1998, and December 1, 1998; or
(B) The institution, the institution’s owner, or the institution’s chief executive officer has been convicted of, or has pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of funds under subchapter IV of this chapter and part C of subchapter I of chapter 34 of title 42, or has been judicially determined to have committed fraud involving funds under subchapter IV of this chapter and part C of subchapter I of chapter 34 of title 42.
(5) Certification. The Secretary shall certify an institution’s qualification as an institution of higher education in accordance with the requirements of subpart 3 of part G of subchapter IV of this chapter.
(6) Loss of eligibility. An institution of higher education shall not be considered to meet the definition of an institution of higher education in paragraph (1) if such institution is removed from eligibility for funds under subchapter IV of this chapter and part C of subchapter I of chapter 34 of title 42 as a result of an action pursuant to part G of subchapter IV of this chapter.

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(1) Principal criteria. For the purpose of this section, the term ‘‘proprietary institution of higher education’’ means a school that—
(A) Provides an eligible program of training to prepare students for gainful employment in a recognized occupation;
(B) Meets the requirements of paragraphs (1) and (2) of section 1001 (a) of this title; (C) Does not meet the requirement of paragraph (4) of section 1001 (a) of this title; (D) Is accredited by a nationally recognized accrediting agency or association recognized by the Secretary pursuant to part G of subchapter IV of this chapter; (E) Has been in existence for at least 2 years; and
(F) Has at least 10 percent of the school’s revenues from sources that are not derived from funds provided under subchapter IV of this chapter and part C of subchapter I of chapter 34 of title 42, as determined in accordance with regulations prescribed by the Secretary.
(2) Additional institutions. The term ‘‘proprietary institution of higher education’’ also includes a proprietary educational institution in any State that, in lieu of the requirement in paragraph (1) of section 1001 (a) of this title, admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located.
(c) Postsecondary vocational institution.
(1) Principal criteria. For the purpose of this section, the term ‘‘postsecondary vocational institution’’ means a school that—
(A) Provides an eligible program of training to prepare students for gainful employment in a recognized occupation;
(B) Meets the requirements of paragraphs (1), (2), (4), and (5) of section 1001 (a) of this title; and
(C) Has been in existence for at least 2 years.
(2) Additional institutions. The term ‘‘postsecondary vocational institution’’ also includes an educational institution in any State that, in lieu of the requirement in paragraph (1) of section 1001 (a) of this title, admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located.

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APPLICATIONS, WAITLIST, AND TENANT SELECTION

INTRODUCTION
When a household wishes to receive assistance under the Section 8 Housing Choice Voucher (HCV) program, the household must submit an application that provides the PHA with the information needed to determine the household’s eligibility. HUD requires the PHA to place all households that apply for assistance on a waitlist. When Section 8 HCV assistance becomes available, the PHA must select applicants from the waitlist in accordance with HUD requirements and PHA policies as stated in the Administrative Plan and the Annual Plan.

The PHA is required to adopt clear policies and procedures for accepting applications, placing applicants on the waitlist, and selecting applicants from the waitlist, and must follow these policies and procedures consistently. The actual order in which applicants are selected from the waitlist can be affected if an applicant has certain characteristics designated by HUD or the PHA that justify their selection. Examples of this are the selection of applicants for income targeting and the selection of applicants that qualify for targeted funding.

HUD regulations require that all households have an equal opportunity to apply for and receive housing assistance, and that the PHA affirmatively further fair housing goals in the administration of the program [24 CFR 982.53, HCV GB p. 4-1]. Adherence to the selection policies described in this chapter ensures that the PHA will be in compliance with all relevant fair housing requirements, as described in Chapter 2.

This chapter describes HUD and PHA policies for taking applications, managing the waitlist, and selecting applicants for Section 8 HCV assistance. The policies outlined in this chapter are organized into three sections, as follows:

Part I: The Application Process. This part provides an overview of the application process and discusses how applicants can obtain and submit applications. It also specifies how the PHA will handle the applications it receives.

Part II: Managing the Waitlist. This part presents the policies that govern how the PHA’s waitlist is structured, when it is opened and closed, and how the public is notified of the opportunity to apply for assistance. It also discusses the process the PHA will use to keep the waitlist current.

Part III: Selection for Section 8 HCV Assistance. This part describes the policies that guide the PHA in selecting households for Section 8 HCV assistance as such assistance becomes available. It also specifies how in-person interviews will be used to ensure that the PHA has the information needed to make a final eligibility determination.

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4-I.A. OVERVIEW
This part describes the PHA policies for making applications available, accepting applications, making preliminary determinations of eligibility, and the placement of applicants on the waitlist. This part also describes the PHA’s obligation to ensure the accessibility of the application process to elderly persons, people with disabilities, and people with limited English proficiency (LEP).
4-I.B. APPLYING FOR ASSISTANCE [HCV GB, PP. 4-11 – 4-16, NOTICE PIH 2009-36] Any household that wishes to receive housing assistance must apply for admission to the program. HUD permits the PHA to determine the format and content of Section 8 HCV applications, as well as how such applications will be made available to interested households and how applications will be accepted by the PHA. The PHA must include Form HUD-92006, Supplement to Application for Federally Assisted Housing, as part of the PHA’s application.

PHA Policy
Applications must be completed online in the method described in the instructions on the PHA’s website in order to be accepted by the PHA for processing. All required information must be filled out before the system will accept the application.

Depending upon the length of time that applicants may need to wait to receive assistance, the PHA may use a one- or two-step application process.

A one-step process will be used when it is expected that a household will be selected from the waitlist within 60 days of the application. At application, the household must provide all the information necessary to establish eligibility and level of assistance.

A two-step process will be used when it is expected that a household will not be selected from the waitlist for at least 60 days from the date of application. Under the two-step application process, the PHA initially will require households to provide only the information needed to make an initial assessment of the household’s eligibility and to determine the household’s placement on the waitlist. This information will be obtained from the household via a preliminary application online when applications are being accepted. As a reasonable accommodation, households may also apply by telephone.

At the time of selection from the waitlist, the household will be required to provide all of the information necessary to establish household eligibility and level of assistance.

The information will be obtained from the household via a full application form.

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If a person with disabilities is unable to complete the online pre-application process due to the nature of their disability, they may request a reasonable accommodation for assistance with the application process. The PHA will accept reasonable accommodation requests from the time that the formal announcement of the waitlist opening is made until the waitlist closes.

Requests for reasonable accommodations received before or after this period will not be approved. In order to prevent delay in the pre-application process for these individuals, the PHA will not verify with a third party the individual’s need for a reasonable accommodation. As a reasonable accommodation, the PHA may allow the applicant to apply by telephone. The applicant must contact the PHA before the deadline specified by the PHA.

Limited English Proficiency
PHAs are required to take reasonable steps to ensure equal access to their programs and activities by persons with limited English proficiency (LEP) [24 CFR 1]. Throughout the application, waitlist, and selection process, the PHA must ensure that LEP individuals are provided with meaningful language access in accordance with HUD’s 2007 LEP Guidance and the PHA LEP Plan. This includes, but is not limited to, providing translated documents to applicants and conducting outreach about waitlist openings/closures and admissions preferences in non-English ethnic media. Chapter 2 provides a full discussion of the PHA’s policies related to ensuring access to LEP individuals. 4-I.D. PLACEMENT ON THE WAITLIST
The PHA must review each complete application received and make a preliminary assessment of the household’s eligibility. The PHA must accept applications from households for whom the list is open unless there is good cause for not accepting the application (such as denial of assistance) for the grounds stated in the regulations [24 CFR 982.206(b)(2)]. Where the household is determined to be ineligible, the PHA must notify the household in writing [24 CFR 982.201(f)]. Where the household is not determined to be ineligible, the household will be placed on a waitlist of applicants.

No applicant has a right or entitlement to be listed on the waitlist, or to any particular position on the waitlist [24 CFR 982.202(c)].

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PHA Policy
If the PHA can determines, based on from the information provided, that an applicant is ineligible, the applicant will not be placed onremoved from the waitlist. Where an applicant is determined to be ineligible, the PHA will send written notification of the ineligibility determination. The notice will specify the reasons for ineligibility and will inform the applicant of their right to request an informal review and explain the process for doing so (see Chapter 16). If the applicant wants to provide additional documentation, it must be submitted at the time the informal review is requested.

Applicants are initially placed on the waitlist based on minimal information, which the applicant family is required to certify as true and accurate during the preliminary application process. Once openings for housing assistance become available, applicants are notified to proceed with the full application and eligibility process. At that stage, all information provided by the applicant is subject to verification.

If the PHA determines during this verification process that a family is ineligible, the family will be removed from the active waitlist. Additionally, as the PHA reviews the waitlist to assess preferences and ensure it remains appropriately sized. An appropriate waitlist size is based on the program funding that is available during the 12-month period following the closing of the waitlist.

Eligible for Placement on the Waitlist
PHA Policy
Waitlist applicants will receive instant confirmation of receipt of application when all required information is completed. A final determination of eligibility will be made when the applicant is selected and all factors of eligibility are verified including preferences.

Once the online application has been accepted, a receipt will be displayed. Waitlist status for the Section 8 HCV waitlist can be viewed on waitlistcheck.com using the account created during the application process. The status of the applications will be available in 30 business days. The PHA will not verify waitlist status via phone or email.

AssistanceCheck pins will be issued for applicants to ensure applicant confidentiality.

AssistanceCheck can be used to update household information. Reasonable accommodation requests regarding assistance can be made to the PHA.

If the waitlist remains open indefinitely, applicants will be pulled from the waitlist based on preference and date and time of the application.

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4-II.A. OVERVIEW
The PHA must have policies regarding various aspects of organizing and managing the waitlist of applicants. This includes opening the list to new applicants, closing the list to new applicants, notifying the public of waitlist openings and closings, updating waitlist information, purging the list of households that are no longer interested in or eligible for assistance, as well as conducting outreach to ensure a sufficient number of applicants.

In addition, HUD imposes requirements on how a PHA may structure its waitlist and how households must be treated if they apply for assistance from a PHA that administers more than one assisted housing program.
4-II.B. ORGANIZATION OF THE SECTION 8 HCV WAITLIST [24 CFR 982.204 AND 205] The PHA’s waitlist must be organized in such a manner to allow the PHA to accurately identify and select applicants for assistance in the proper order, according to the admissions policies described in this plan.

The waitlist must contain the following information for each applicant listed:
x Applicant name;
x Household size;
x Date and time of application;
x Qualification for any local preference;
x Racial or ethnic designation of the head of household; and x Income.

HUD requires the PHA to maintain a single waitlist for the Section 8 HCV program unless it serves more than one county or municipality. Such PHAs are permitted, but not required, to maintain a separate waitlist for each county or municipality served.

HUD permits, but does not require, that PHAs maintain a single merged waitlist for their public housing, Section 8 HCV, and other subsidized housing programs.

A household’s decision to apply for, receive, or refuse other housing assistance must not affect the household’s placement on the Section 8 HCV waitlist, or any preferences for which the household may qualify.

PHA Policy
The PHA will maintain a single waitlist for Section 8 HCV vouchers. The PHA will maintain an additional waitlist for HOME vouchers, a waitlist for continuum of Care (CoC) vouchers, and multiple waitlists for Project-Based (PBV) Section 8 vouchers. HUD directs that a household that applies for assistance from the Section 8 HCV program must be offered the opportunity to be placed on the waitlist for any public housing, projectbased voucher or moderate rehabilitation program the PHA operates if 1) the other programs’ waitlists are open, and 2) the household is qualified for the other programs.

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19. For HOME waitlist procedures, see Chapter 20.
4-II.C. OPENING AND CLOSING THE WAITLIST [24 CFR 982.206] Closing the Waitlist
A PHA is permitted to close the waitlist if it has an adequate pool of households to use its available assistance. Alternatively, the PHA may elect to continue to accept applications only from certain categories of households that meet particular preferences or funding criteria.

PHA Policy
The PHA may close the waitlist when it has an adequate pool of households to use the available assistance. Where the PHA has particular preferences or funding criteria that require a specific category of household or address the need of vulnerable populations, such as Tier 1 Priorities, homeless or Project-Based Voucher (PBV), the PHA may elect to continue to accept applications from these applicants while closing the waitlist to others.

Reopening the Waitlist
If the waitlist has been closed, it cannot be reopened until the PHA publishes a notice in local newspapers of general circulation, minority media, and other suitable media outlets. The notice must comply with HUD fair housing requirements and must specify who may apply, and where and when applications will be received.

PHA Policy
The PHA will announce the reopening of the waitlist at least 10 business days prior to the date applications will first be accepted. If the list is only being reopened for certain categories of applicants, this information will be contained in the notice.

The PHA will give public notice by publishing the relevant information in suitable media outlets including, but not limited to:
x Placing a notice in the local newspaper
x Posting a notice in plain view in the City Hall lobby, with a translated version(s) in accordance with the PHA’s LEP Plan
x Placing a notice in the Spanish language newspaper, as well as newspapers that serve other language communities in accordance with the PHA’s LEP Plan x Posting a notice in community centers, including those that serve largely nonEnglish speaking populations x Arranging http://www.smgov.net/ and cable TV public service announcements; including announcements that are accessible in non-English languages, in accordance with the PHA’s LEP Plan

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4-II.D. APPLICANT OUTREACH [HCV GB, PP. 4-2 TO 4-4]
The PHA must conduct outreach as necessary to ensure that the PHA has a sufficient number of applicants on the waitlist to use the resources it has been allotted.

Because HUD requires the PHA to admit a specified percentage of extremely low-income households to the program (see Chapter 4, Part III), the PHA may need to conduct special outreach to ensure that an adequate number of such households apply for assistance [HCV GB, p. 4-20 to 4-21].

PHA outreach efforts must comply with fair housing requirements. This includes:
x Analyzing the housing market area and the populations currently being served to identify underserved populations
x Ensuring that outreach efforts are targeted to media outlets that reach eligible populations that are underrepresented in the program
x Avoiding outreach efforts that prefer or exclude people who are members of a protected class.

PHA outreach efforts must be designed to inform qualified households about the availability of assistance under the program. These efforts may include, as needed, any of the following activities:
x Submitting press releases to local newspapers, including minority and non-English newspapers
x Developing informational materials and flyers to distribute to other agencies x Providing application forms to other public and private agencies that serve the low-income population
x Developing partnerships with other organizations that serve similar populations, including agencies that provide services for persons with disabilities, as well as immigrant populations.

PHA Policy
The PHA will monitor the characteristics of the population being served and the characteristics of the population as a whole in the PHA’s jurisdiction. Targeted outreach efforts will be undertaken if a comparison suggests that certain populations are being underserved.

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PHA Policy
While the household is on the waitlist, the household must immediately inform the PHA of changes in income and contact information, including current residence, mailing address, and phone number. The changes must be submitted in writing within 15 calendar days of the date of the change using the AssistanceCheck website.

The household will not be permitted to report changes in household size or composition (add new household members not included on the household’s pre-application) after the household has received notification of being selected from the waitlist, except:

The household may add children who joined the household as a result of birth, adoption, or court-awarded custody. The household may add other household members due to marriage or domestic partnership (spouse, domestic partners, co-head). 4-II.F. UPDATING THE WAITLIST [24 CFR 982.204]
HUD requires the PHA to establish policies to use when removing applicant names from the waitlist.

Purging the Waitlist
The decision to withdraw an applicant household that includes a person with disabilities from the waitlist is subject to reasonable accommodation. If the applicant did not respond to a PHA request for information or updates, and the PHA determines that the household did not respond because of the household member’s disability, the PHA must reinstate the applicant household to their former position on the waitlist [24 CFR 982.204(c)(2)].

PHA Policy
The PHA reserves the right to purge the waitlist annually by removing (deleting) all applications that were not selected during the 12-month period that began on the date the waitlist was closed.

To update the waitlist, the PHA will re-open the waitlist based on need or on a schedule to be determined and published on the PHA’s website. The PHA may stop accepting applications if it is determined that the existing waitlist contains an adequate pool of applicants to utilize the program funding that is available during the 12-month period following the closing of the waitlist.

Applicants will be notified at time of application that their application to the waitlist is valid for a minimum of 12 months and that if not selected during that time period they may need to re-apply when the waitlist is re-opened.

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PHA Policy
If at any time an applicant is on the waitlist, the PHA determines that the applicant is not eligible for assistance (see Chapter 3), the applicant will be removed from the waitlist. If an applicant is removed from the waitlist because the PHA has determined the applicant is not eligible for assistance, a notice will be sent to the applicant’s address of record as well as to any alternate address provided on the initial application. The notice will state the reasons the applicant was removed from the waitlist and will inform the household how to request an informal review regarding the PHA’s decision (see Chapter 16) [24 CFR 982.201(f)]. In accordance with the PHA’s LEP Plan, a translated version of the notice of removal from the waitlist, and other appropriate language assistance, will be provided to known LEP applicants.

PHA will remove names of applicants:
x That do not respond to a written request for information or updates; or x If correspondence to the applicant is returned by the Postal Service for any reason.
x That have become a participant in any of the PHA’s programs.

In these instances, the PHA is not required to make any further effort to contact the applicant. An informal review is not required to be offered.

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4-III.A. OVERVIEW
As vouchers become available, applicants on the waitlist must be selected for assistance in accordance with the policies described in this part.

The order in which applicants are selected from the waitlist depends on the selection method chosen by the PHA and is impacted in part by any selection preferences for which the applicant qualifies. The availability of targeted funding may affect the order in which applicants are selected from the waitlist.

The PHA must maintain a clear record of all information required to verify that the applicant is selected from the waitlist according to the PHA’s selection policies [24 CFR 982.204(b) and 982.207(e)].
4-III.B. SELECTION AND SECTION 8 HCV FUNDING SOURCES
Special Admissions (non-waitlist) [24 CFR 982.203]
HUD may award funding for specifically named households living in specified types of units (e.g., a household that is displaced by demolition of public housing; a non-purchasing household residing in a HOPE 1 or 2 projects; or a household potentially displaced because of mortgage prepayment; or HUD 811, 202, or 236 where an existing project is to convert to market). In these cases, the PHA may admit such households whether or not they are on the waitlist, and, if they are on the waitlist, without considering the household’s position on the waitlist. These households are considered non-waitlist selections. The PHA must maintain records showing that such households were admitted with special program funding.

Targeted Funding [24 CFR 982.204(e)]
HUD may award a PHA funding for a specified category of households on the waitlist. The PHA must use this funding only to assist the households within the specified category. In order to assist households within a targeted funding category, the PHA may skip households that do not qualify within the targeted funding category. Within this category of households, the order in which such households are assisted is determined according to the policies provided in Section 4-III.C.

PHA Policy
The PHA administers the following types of targeted funding:
x Continuum of Care (see Chapter 19 for waitlist selection policies) and HOME programs (see Chapter 20 for waitlist selection policies).

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The PHA may offer additional preferences for the project-based Section 8 program (PBV) or for particular PBV projects or units. Applicants for these programs must meet additional, specific eligibility requirements. In order to assist these applicants, the PHA may skip applicants that do not qualify.
(Please refer to Chapter 17 for additional details on Project-Based Vouchers) 4-III.C. SELECTION METHOD
PHAs must describe the method for selecting applicants from the waitlist, including the system of admission preferences that the PHA will use [24 CFR 982.202(d)].

Local Preferences [24 CFR 982.207; HCV p. 4-16]
PHAs are permitted to establish local preferences, and to give priority to serving applicants that meet those criteria. HUD specifically authorizes and places restrictions on certain types of local preferences. HUD also permits the PHA to establish other local preferences, at its discretion.

Any local preferences established must be consistent with the PHA plan and the consolidated plan and must be based on local housing needs and priorities that can be documented by generally accepted data sources.

The Housing Authority may implement a Temporary Priority to our wait lists for any natural disaster or national emergency occurring outside Santa Monica’s jurisdiction that the City formally supports through Council action, Emergency Order, or Housing Authority Board action.

This priority will be enacted based on the criteria and priorities established in the respective action and/or order to address the emergency or disaster.

PHA Policy
The PHA will use the following local preferences in order listed:

Tier 1 Preferences:
x Displaced: Involuntarily displaced applicants are applicants who have or will (within 12 months from the date of verification) be required to vacate housing in the City of Santa Monica as a result of:
ƒ A disaster (fire, flood, earthquake, civil disturbance, etc.) that occurred through no fault of the applicant;
ƒ Displacement from another federal housing program for reasons beyond their control or because they did not participate in a home ownership program;
ƒ Domestic Violence. Victims of domestic violence/familial abuse, sexual assault, stalking, or human trafficking, who have been displaced in the City of Santa Monica as a result of the victimization.

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ƒ Federal, state or local government action related to code enforcement, public improvement or development;
ƒ An eviction pursuant to the Ellis Act or Civil Code section 798.56(g) of the Mobile Home Residency Law;
ƒ Owner/relative occupancy evictions from rent controlled units under Section 1806(a)(8) of the Santa Monica Rent Control Amendment and under Santa Monica City Charter, Article XVIII, Section 2304(c)(8); or Owner-occupancy decontrol of a unit in their duplex or triplex that results in the tenant paying more than 40% of their gross annual income toward rent.

In order to receive the displaced preference, applicants who have been displaced in the previous 12-month period must not be living in “standard, permanent replacement housing”.

Standard, permanent replacement housing is defined as housing that is decent, safe and sanitary (according to HUD HQS), that is adequate for the household size (according to HUD HQS) and that the household is occupying pursuant to a lease or occupancy agreement. Minor HQS violations that are few in a number do not disqualify replacement housing. Standard replacement housing does not include transient facilities, hotels, motels, or temporary shelters.
x Households who receive a displaced preference, who have had an actual loss of their unit, will be given highest preference. For example, households who have been physically displaced from their unit as the result of a non-tenant caused fire or flood will be given the highest preference. Funding shortfalls:

Applicants that have been terminated from the PHA’s Section 8 HCV program due to insufficient program funding and are at greatest risk of homelessness.
x The Santa Monica Housing Authority (SMHA) A maximum of 20 HCVs will be allocated annually up to 50% of voucher attrition to assistsupport Santa Monica-Based households residents who are experiencing homelessness or are at risk of homelessness. Eligibility for the Housing Choice Voucher (HCV) program requires individuals or families to be referred by an approved SMHA Partner., City of Santa Monica social service agency, or community organization. These referrals must be screened and approved by the Santa Monica Housing Authority before being accepted, at which point applicants will receive priority placement on the waitlist.

Additionally, the City of Santa Monica Human Services Division, or a designated representative approved by the Housing Division, may submit

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CoC and supportive housing graduates: The PHA may prioritize a limited number of Section 8 HCV program vouchers for Continuum of Care program participants (“CoC graduates”) or tenants residing in City-funded supportive housing properties in Santa Monica (“supportive housing graduates”) who are stable and no longer require service participation to prevent them from recycling into homelessness. This will allow the community to serve more homeless applicants and better utilize services for those most in need. The PHA shall limit the current number of households eligible for this preference to 25 annually. Tier 1 households who qualify for the displaced or funding shortfalls preferences will have priority over CoC graduates and supportive housing graduates.

The wait list for Tier 1 applicants shall always remain open.

Tier 2 Preferences:
x Live: Applicants who live in rent-controlled apartments in Santa Monica (Chronically homeless applicants on the Santa Monica Service Registry are considered residents of Santa Monica).and pay more than 40% of their gross annual income toward rent. x Work:
o Applicants who work a minimum of 25 hours per week in Santa Monica. (Applicants who work for a temporary
agency do not qualify for preference if they are on a
temporary assignment.)
o Applicants who are residents of Santa Monica and work a minimum of 25 hours per week outside of Santa Monica.
o Applicants who were immediately previously in the Santa Monica workforce but are now receiving unemployment,
worker’s compensation, vocational rehabilitation benefits, disability benefits, or retirement benefits from a Santa Monica employer.
o Applicants who are in a job training program in Santa Monica, subject to the PHA’s approval.

Tier 3:

Applicants who do not qualify for the Tier 1 – 2 preferences.

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Unlimited copies may be made for internal use. Page 4-15 x Applicants who are residents of Santa Monica and do not meet the live or work criteria for Tier 2. (Chronically homeless applicants on the Santa Monica Service Registry are considered residents of Santa Monica).

Tier 4:

Applicants who do not qualify for the Tier 1 – 3 preferences.

Order of Selection Within Tiers
The PHA system of preferences may select households based on local preferences according to the date and time of application, or by a random selection process (lottery) [24 CFR 982.207(c)].

If a PHA does not have enough funding to assist the household at the top of the waitlist, it is not permitted to skip down the waitlist to a household that it can afford to subsidize when there are not sufficient funds to subsidize the household at the top of the waitlist [24 CFR 982.204(d) and (e)].

PHA Policy
x Applicants will be selected from the waitlists based on the targeted funding or selection preference(s) for which they qualify, and in accordance with the PHA’s hierarchy of preferences, if applicable. Within each targeted funding or preference category (i.e., Tier), applicants will be selected on a first-come, first-served basis according to the date and time their complete application is received by the PHA.
x Preference Denial: If the PHA denies an applicant’s preference claim, the PHA shall return the applicant to the waitlist and will notify the applicant in writing of the reasons for the denial. If the applicant fraudulently claimed the preference (i.e., by falsifying documents), the application is denied and removed from the waitlist. The notice shall advise the applicant of their right to contest denial of preference (informal review).

Income Targeting Requirement [24 CFR 982.201(b)(2)]
HUD requires that extremely low-income (ELI) households make up at least 75% of the households admitted to the Section 8 HCV program during the PHA’s fiscal year. ELI households are those with annual incomes at or below 30% of the area median income. To ensure this requirement is met, a PHA may skip non-ELI households on the waitlist in order to select an ELI household.

Low-income households admitted to the program that are “continuously assisted” under the 1937 Housing Act [24 CFR 982.4(b)], as well as low-income or moderate-income households admitted to the program that are displaced as a result of the prepayment of the mortgage or voluntary termination of an insurance contract on eligible low-income housing, are not counted for income targeting purposes [24 CFR 982.201(b)(2)(v)].

PHA Policy

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Unlimited copies may be made for internal use. Page 4-16 The PHA will monitor progress in meeting the income-targeting requirement throughout the fiscal year. Extremely low-income households will be selected ahead of other eligible households on an as-needed basis to ensure the income-targeting requirement is met.

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Unlimited copies may be made for internal use. Page 4-17 4-III.D. NOTIFICATION OF SELECTION
When a household has been selected from the waitlist, the PHA must notify the household [24 CFR 982.554(a)].

PHA Policy
The PHA will notify the applicant when selected from the waitlist. Applicants must complete an application and provide all required documentation by the date specified, or the applicant will be removed from the waitlist.

After two documented attempts to notify the applicant without response, the applicant will be removed from the waitlist. In accordance with PHA’s LEP Plan, the PHA will include a translated statement for LEP applicants in the selection notification packet; this statement will notify LEP applicants of the availability of translated materials and additional language assistance.
4-III.E. THE APPLICATION INTERVIEW
HUD recommends that the PHA obtain the information and documentation needed to make an eligibility determination though a face-to-face interview with a PHA representative [HCV GB, pg. 4-16]. Being invited to attend an interview does not constitute admission to the program.

Assistance cannot be provided to the household until all SSN documentation requirements are met. However, if the PHA determines that an applicant household is otherwise eligible to participate in the program, the household may retain its place on the waitlist for a period of time determined by the PHA [Notice PIH 2012-10, Final Streamlining Rule; See Chapter 7 for PHA’s Verification Policies]
Reasonable accommodation must be made for persons with disabilities who are unable to attend an interview due to their disability.

PHA Policy
Households selected from the waitlist are required to participate in an eligibility interview.

All adult household members will be strongly encouraged to attend the interview together. However, either the head of household or the spouse/cohead may attend the interview on behalf of the family. Additionally, the PHA reserves the right to require any or all adult household members to attend the interview if it is necessary to make an eligibility determination.

The adult household members must provide acceptable documentation of legal identity. (Chapter 7 provides a discussion of proper documentation of legal identity). If any adult household member does not provide the required documentation at the time of the interview, they will be required to provide it within 10 business days.

Pending disclosure and documentation of social security numbers, the PHA will allow the household to retain its place on the waitlist for three months. If all household

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Unlimited copies may be made for internal use. Page 4-18 members have not disclosed their SSNs at the next time the PHA is issuing vouchers, the PHA will issue a voucher to the next eligible applicant on the waitlist.

The household must provide the information necessary to establish the household’s eligibility and determine the appropriate level of assistance, and must complete required forms, provide required signatures, and submit required documentation. If any materials are missing, the PHA will provide the household with a written list of items that must be submitted.

Any required documents or information that the household is unable to provide at the interview must be provided within five business days of the interview (Chapter 7 provides details about longer submission deadlines for particular items, including documentation of eligible noncitizen status). If the household is unable to obtain the information or materials within the required time frame, an extension may be granted depending upon the circumstances. If the required documents and information are not provided within the required time frame (plus any extensions), the household will be sent a notice of denial (See Chapter 3).

Per the PHA’s LEP Policy (see Chapter 2, Part III LEP for more information), an advocate, interpreter, or other assistant may assist the household with the application and the interview process. No minor children will be permitted to act as an interpreter for these interviews.

Interviews will be conducted in English. For LEP applicants, the PHA will provide interpretation services free of charge in accordance with the PHA’s LEP plan.

During the interview process, the PHA will also provide translated copies of any documents considered to be “vital documents” in accordance with the PHA LEP Plan.

If the household is unable to attend a scheduled interview, the household should contact the PHA in advance of the interview to reschedule a new appointment.

Applicants who fail to attend the scheduled interview without PHA approval will be denied assistance based on the household’s failure to supply information needed to determine eligibility. A notice of denial will be issued in accordance with policies contained in Chapter 3.

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Unlimited copies may be made for internal use. Page 4-19 4-III.F. COMPLETING THE APPLICATION PROCESS
The PHA must verify all information provided by the household (see Chapter 7). Based on verified information, the PHA must make a final determination of eligibility (see Chapter 3) and must confirm that the household qualified for any special admission, targeted funding, or selection preference that affected the order in which the household was selected from the waitlist.

PHA Policy
If the PHA determines that the household is ineligible, the PHA will send written notification of the ineligibility determination within 10 business days of the determination. The notice will specify the reasons for ineligibility and will inform the household of its right to request an informal review (Chapter 16). Additional documentation to be considered by the PHA must be provided by applicant at the time of request for the informal review.

If a household fails to qualify for any criteria that affected the order in which it was selected from the waitlist (e.g., targeted funding, extremely low-income), the household will be returned to the waitlist. The PHA will notify the household in writing that it has been returned to the waitlist and will specify the reasons for it. If the applicant made fraudulent claims (i.e., by falsifying documents), they will be removed from the waitlist.

In accordance with the PHA’s LEP Plan, a translated version of the notice of ineligibility, and/or notification of the availability of other appropriate language assistance regarding the notice, will be provided to LEP applicants.

If the PHA determines that the household is eligible to receive assistance, the PHA will invite the applicant and all household members to attend a briefing in accordance with the policies in Chapter 5.

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Unlimited copies may be made for internal use. Page 4-20 EXHIBIT 4-1: PHA’S SECTION 8 HCV WAITLIST & HIERARCHY OF PREFERENCES The below table is a summary; please see section 4-III.C. SELECTION METHOD for more detailed information on each preference.

TIER PREFERENCES POINT VALUE
One Displaced Preference:
x An involuntarily displaced household who has or will be required to vacate housing in the City of Santa Monica 5 One Funding Shortfalls Preference:
x An eligible household that was previously terminated from a PHA program due to insufficient program funding. 4
One Continuum of Care (CoC) Graduate or Supportive Housing Graduate Preference:
x CoC graduates or tenants residing in City-funded supportive housing properties in Santa Monica who are stable and no longer require service participation to prevent them from recycling into homelessness. The PHA shall limit the current number of households eligible for this preference to 25 annually.
3 Two x Live Preference: Applicants who live in rent-controlled apartments in Santa Monica and pay more than 40% of their gross annual income toward rent.
x Work Preference: Applicants who work a minimum of 25
hours per week in Santa Monica (Applicants who work for a temporary agency do not qualify for preference if they are on a temporary assignment.)
x Applicants who are residents of Santa Monica and work a minimum of 25 hours per week outside of Santa Monica.
x Applicants who were immediately previously in the Santa Monica workforce but are now receiving unemployment,
worker’s compensation, vocational rehabilitation benefits, disability benefits or retirement benefits from a Santa Monica employer.
x Applicants who are in a job training program in Santa Monica, subject to the PHA’s approval.
2 Three Applicants who are residents of Santa Monica and do not meet the live or work criteria for Tier 2. 1
Four Applicants who do not qualify for the Tier 1 – 3 preferences. 0 The numerical point values indicated in the table above reflect the priorities among Tiers 1 –

43. Households can meet the criteria for only one of the point values.

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Unlimited copies may be made for internal use. Page 5-1 Chapter 5

BRIEFINGS AND VOUCHER ISSUANCE

INTRODUCTION
This chapter explains the briefing and voucher issuance process. When a family is determined to be eligible for the Housing Choice Voucher (HCV) program, the PHA must ensure that the family fully understands the way the program operates and the family’s obligations under the program. This is accomplished through both an oral briefing and provision of a briefing packet containing of the HUD-required documents and other information the family needs to know in order to lease a unit under the program. Once the family is fully informed of the program’s requirements, the PHA issues the family a voucher. The voucher includes the unit size for which the family qualifies based on the PHA’s subsidy standards, as well as the issue and expiration date of the voucher. The voucher is the document that authorizes the family to begin its search for a unit and limits the amount of time the family must successfully locate an acceptable unit.

This chapter describes HUD regulations and PHA policies related to these topics in two parts:

Part I: Briefings and Family Obligations. This part details the program’s requirements for briefing families orally, and for providing written materials describing the program and its requirements. It includes a focus on the family’s obligations under the program.

Part II: Subsidy Standards and Voucher Issuance. This part discusses the PHA’s standards for determining how many bedrooms a family of a given composition qualifies for, which in turn affects the amount of subsidy the family can receive. It also discusses the policies that dictate how vouchers are issued, and how long families must locate a unit.

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Unlimited copies may be made for internal use. Page 5-2 PART I: BRIEFINGS AND FAMILY OBLIGATIONS
5-I.A. OVERVIEW
HUD regulations require the PHA to conduct mandatory briefings for applicant families who qualify for a voucher. The briefing provides a broad description of owner and family responsibilities, explains the PHA’s procedures, and includes instructions on how to lease a unit.

This part describes how oral briefings will be conducted, specifies what written information will be provided to families via the SMHA website, and lists the family’s obligations under the program. The PHA must take reasonable steps to ensure meaningful access by persons with Limited English proficiency.
5-I.B. BRIEFING [24 CFR 982.301]
Notification of Briefing
Prior to issuance of a voucher, the PHA must give the family an oral briefing and provide the family with a briefing packet containing written information about the program. Families may be briefed in individual face-to-face meetings, through group briefing sessions, or via remote briefing sessions.

PHA Policy
Families will be notified of their eligibility for assistance at the time they are invited to a briefing. The notice will be sent by first class mail and will also be sent by email if the family has provided a valid email address to the PHA.

The notice will advise the family of the type of briefing, who is required to be present at the briefing, and the date and time of the briefing. The notice will also inform the family of any additional requirements for in-person or remote briefings as addressed in relevant policy elsewhere in this section.

If the notice is returned by the post office with no forwarding address, the applicant will be denied and their name will not be placed back on the waiting list. If the notice is returned by the post office with a forwarding address, the notice will be resent to the address indicated.

In-Person Briefing
At the briefing, the PHA must ensure effective communication in accordance with Section 504 requirements (Section 504 of the Rehabilitation Act of 1973) and ensure that the briefing site is accessible to individuals with disabilities. For a more thorough discussion of accessibility requirements, refer to Chapter 2.

PHA Policy
Briefing packets containing written information about the program are available to participants online through their AssistanceCheck account. Paper copies are available for participants upon request.

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Unlimited copies may be made for internal use. Page 5-3 In-person briefings will generally be conducted in group meetings. At the family’s written request, the PHA may provide an individual briefing.

The head of household is required to attend the briefing.

Families that attend group briefings and still need individual assistance will be referred to an appropriate PHA staff person.

Briefings will be conducted in English. For limited English proficient (LEP) applicants, the PHA will provide interpretation services free of charge in accordance with the PHA’s LEP plan (See Chapter 2).

Before and during the briefing process, SMHA will also provide translated copies of any documents considered to be “vital documents” in accordance with the SMHA LEP Plan.

Attendance
PHA Policy
Applicants who fail to attend a scheduled in-person briefing will be scheduled for another briefing automatically. The PHA will notify the family of the date and time of the second scheduled briefing. Applicants who fail to attend two scheduled briefings, without prior PHA approval, will be denied assistance (see Chapter 3).

Remote Briefings [Notice PIH 2020-32]
Remote briefings may be conducted over the phone, via video conferencing, or through other virtual platforms.

PHA Policy
The PHA has the sole discretion to require that briefings be conducted remotely in case of local, state, or national physical distancing orders, and in cases of inclement weather or natural disaster. If the PHA schedules a remote briefing, the PHA will conduct a faceto-face briefing upon request of the applicant as a reasonable accommodation for a person with a disability if safety and health concerns can be reasonably addressed.

In addition, the PHA will conduct a briefing remotely upon request of the applicant as a reasonable accommodation for a person with a disability, if an applicant does not have child care or transportation that would enable them to attend the briefing, or if the applicant believes an in-person briefing would create an undue health risk. The PHA will consider other reasonable requests for a remote briefing on a case-by-case basis.

Accessibility Requirements for Persons with Disabilities and LEP Individuals As with in-person briefings, the platform for conducting remote briefings must be accessible and the briefing conducted in accordance with Section 504 and accessibility requirements. This includes ensuring any information, websites, emails, digital notifications, and other virtual platforms are accessible for persons with vision, hearing, and other disabilities. Further, providing effective communication in a digital context may require the use of individualized

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Unlimited copies may be made for internal use. Page 5-4 auxiliary aids or services, such as audio description, captioning, sign language and other types of interpreters, keyboard accessibility, accessible documents, screen reader support, and transcripts. Auxiliary aids or services must be provided in accessible formats, in a timely manner, and in such a way to protect the privacy and independence of the individual.

If no method of conducting a remote briefing is available that appropriately accommodates an individual’s disability, the PHA may not hold against the individual their inability to participate in the remote briefing, and the PHA should consider whether postponing the remote briefing to a later date is appropriate or whether there is a suitable alternative.

Due to the individualized nature of disability, the appropriate auxiliary aid or service necessary, or reasonable accommodation, will depend on the specific circumstances.

Limited English Proficiency (LEP) requirements also apply to remote briefings, including the use of interpretation services and document translation. See Chapter 2 for a more thorough discussion of accessibility and LEP requirements, all of which apply in the context of remote briefings.

Conducting Remote Briefings
The PHA must ensure that the lack of technology or inability to use technology for remote briefings does not pose a disadvantage to families that may not be apparent to the PHA. The PHA must ensure that the family has appropriate technological access in order to fully participate in the remote briefing.

PHA Policy
At least 10 business days prior to scheduling the remote briefing, the PHA will provide written notification via first class mail and/or email to families participating in the briefing to advise of technological requirements and to request the family notify the PHA of any known barriers. If any family does not respond within five business days, or if the written notification is returned by the post office or the email is rejected, the PHA will contact the family by telephone to identify potential technological barriers and to determine which technology resources are accessible to the family. The PHA will resolve any barriers using the guidance in Section 6 of Notice PIH 2020-32, including offering the family the opportunity to attend an in-person briefing or have a one-on-one briefing over the phone, as appropriate.

The PHA will conduct remote briefings via a video conferencing platform when available.

If applicants are unable to adequately access the video conferencing platform, the briefing will be conducted by telephone conferencing call-in. If the family is unable to adequately access the telephone conferencing call-in, the remote briefing will be postponed, and an in-person alternative or one-on-one briefing over the phone will be provided.

The PHA will provide login information and/or conferencing call-in information and an electronic copy of the briefing packet via email at least five business days before the briefing. The PHA will provide a paper copy of the briefing packet upon family request,

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The PHA will ensure that all electronic information stored or transmitted as part of the briefing meets the requirements for accessibility for persons with disabilities and persons with LEP, and is secure, including ensuring personally identifiable information (PII) is protected.

The PHA will ensure that families who participate in remote briefings have the opportunity to ask questions as part of the briefing.

If families lose connectivity during any remote briefing or otherwise feel they were unable to access information presented during the briefing, the family may request a one-on-one briefing over the phone or in person with the PHA.

Oral Briefing [24 CFR 982.301(a)]
Each briefing must provide information on the following subjects:
x How the Housing Choice Voucher program works;
x Family and owner responsibilities;
x Where the family can lease a unit, including renting a unit inside or outside the PHA’s jurisdiction and any information on selecting a unit that HUD provides; x An explanation of how portability works. The PHA may not discourage the family from choosing to live anywhere in the PHA jurisdiction or outside the PHA jurisdiction under portability, unless otherwise expressly authorized by statute, regulation, PIH Notice, or court order;
x The PHA must inform the family of how portability may affect the family’s assistance through screening, subsidy standards, payment standards, and any other elements of the portability process which may affect the family’s assistance; and x An explanation of tThe advantages of areas that do not have a high concentration of lowincome families; and x For families receiving welfare-to-work vouchers, a description of any local obligations of a welfare-to-work family and an explanation that failure to meet the obligations is grounds for denial of admission or termination of assistance.

In briefing a family that includes a person with disabilities, PHA must also take steps to ensure effective communication.

The PHA may not discourage the family from choosing to live anywhere in the PHA’s jurisdiction or outside the PHA’s jurisdiction under portability, unless otherwise expressly authorized by statute, regulation, PIH Notice, or court order.

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Unlimited copies may be made for internal use. Page 5-6 The PHA must take appropriate steps to ensure effective communication in accordance with 24 CFR 8.6 and 28 CFR part 35, subpart E, and must provide information on the reasonable accommodation process.

Briefing Packet [24 CFR 982.301(b); New HCV GB, Housing Search and Leasing, p. 7] Documents and information provided in the briefing packet must include the following:
x The term of the voucher, voucher suspensions, and the PHA’s policies on any extensions of the term. If the PHA allows extensions, the packet must explain how the family can request an extension.
x A description of the method used to calculate the housing assistance payment for a family, including how the PHA determines the payment standard for a family, how the PHA determines total tenant payment for a family, and information on the payment standard and utility allowance schedule.
x An explanation of how the PHA determines the maximum allowable rent for an assisted unit.
x Where the family may lease a unit and an explanation of how portability works, including information on how portability may affect the family’s assistance through screening, subsidy standards, payment standards, and any other elements of the portability process that may affect the family’s assistance;
x The HUD-required tenancy addendum, which must be included in the lease. x The form the family must use to request approval of tenancy, and an explanation description of how to the procedure for requesting approval for a tenancy. x A statement of the PHA policy on providing information about families to prospective owners.
x The PHA subsidy standards and when the PHA will consider granting exceptions as allowed by 24 CFR 982.404(b)(8), and when exceptions are required as a reasonable accommodation for persons with disabilities under Section 504, the Fair Housing Act, or the Americans with Disabilities Act (ADA).
x including when and how exceptions are made.
x Materials (e.g., brochures) on how to select a unit and any additional information on selecting a unit that HUD provides (e.g., HUD brochure entitled, “A Good Place to Live”).

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Unlimited copies may be made for internal use. Page 5-7 x Information on federal, state and local equal opportunity laws , the contact information for the Section 504 coordinator, and a copy of the housing discrimination complaint form, including information on how to complete the form and file a fair housing complaint. x and a copy of the housing discrimination complaint form, including information on how to complete the form and file a fair housing complaint.
x A list of landlords known to the PHA who may be willing to lease a unit to the family or other resources (e.g., newspapers, organizations, online search tools) known to the PHA that may assist the family in locating a unit. PHAs must ensure that the list of landlords or other resources covers areas outside of poverty or minority concentration. x Notice that if the family includes a person with disabilities, the family may request a list of available accessible units known to the PHA.
x The family obligations under the program, including any obligations of a welfare-to-work family, and any obligations of other special programs if the family is participating in one of those programs.
x The grounds on which the PHA may terminate assistance for a participant family because of family action or failure to act.
x PHA informal hearing procedures including when the PHA is required to offer a participant family the opportunity for an informal hearing, and how to request the hearing. x An explanation of the advantages of moving to an area that does not have a high concentration of low-income families, which may include access to accessible and highquality housing, transit, employment opportunities, educational opportunities, recreational facilities, public safety stations, retail services, and health services. x The HUD pamphlet on lead-based paint entitled, “Protect Your Family from Lead in Your Home." [24 CFR 35.88].

If the PHA is located in a metropolitan area, the following additional information must be included in the briefing packet in order to receive full points under SEMAP Indicator 7, Expanding Housing Opportunities [24 CFR 985.3(g)].
x Maps showing areas with housing opportunities outside areas of poverty or minority concentration, both within its jurisdiction and its neighboring jurisdiction. x Information about the characteristics of these areas including job opportunities, schools, transportation and other services.
x An explanation of how portability works, including a list of portability contact persons for neighboring PHAs including names, addresses, and telephone numbers.

Additional Items to be Included in the Briefing Packet
In addition to items required by the regulations, PHAs may wish to include supplemental materials to help explain the program to both participants and owners [HCV GB p. 8-7, Notice PIH 2017-12].

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Unlimited copies may be made for internal use. Page 5-8 PHA Policy
The PHA will provide the following additional materials in the briefing packet:

The grounds on which the PHA may terminate assistance for a participant family because of family action or failure to act
Requirements for notifying the PHA of any changes in income or family composition
Information on how to fill out and file a housing discrimination complaint form The publication Things You Should Know (HUD-1140-OIG) that explains the types of actions a family must avoid and the penalties for program abuse The form HUD-5380 domestic violence certification form and the form HUD5382 notice of occupancy rights, which contain information on VAWA protections for victims of domestic violence, dating violence, sexual assault, and stalking
“Is Fraud Worth It?” (form HUD-1141-OIG), which explains the types of actions a family must avoid and the penalties for program abuse
“What You Should Know about EIV,” a guide to the Enterprise Income Verification (EIV) system published by HUD as an attachment to Notice PIH 2017- 12 Proof of effort search record.

Packet for owners with an HQS checklist.

Eligibility requirements for medical expense deduction.

Family Self-Sufficiency Program information.

Information regarding risks associated with lead-based paint.

Reminder to family that it is mandatory that the household report any changes in Household Income (for all household members 18 and older) in writing within 10 business days. This reminder shall detail information about income discrepancies and the Income Verification system used by the PHA. 5-I.C. FAMILY OBLIGATIONS
Obligations of the family are described in the housing choice voucher (HCV) regulations and on the voucher itself. These obligations include responsibilities the family is required to fulfill, as well as prohibited actions. The PHA must inform families of these obligations during the oral briefing, and the same information must be included in the briefing packet. When the family’s unit is approved and the HAP contract is executed, the family must meet those obligations in order to continue participating in the program. Violation of any family obligation may result in termination of assistance, as described in Chapter 12.

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Unlimited copies may be made for internal use. Page 5-9 Time Frames for Reporting Changes Required by Family Obligations PHA Policy
Unless otherwise noted below, when family obligations require the family to respond to a request or notify the PHA of a change, notifying the PHA of the request or change within 10 business days is considered prompt notice.

When a family is required to provide notice to the PHA, the notice must be in writing.

Family Obligations [24 CFR 982.551]
The family obligations of the voucher are listed as follows:

1. The family must supply any information that the PHA or HUD determines to be necessary in the administration of the program, including submission of required evidence of citizenship or eligible immigration status. “Information” includes any requested certification, release or other documentation.

2. The family must supply any information requested by the PHA or HUD for use in a regularly scheduled reexamination or interim reexamination of family income and composition in accordance with HUD requirements.

3. The family must disclose and verify social security numbers and sign and submit consent forms for obtaining information.

4. Any information supplied by the family must be true and complete.

5. The family may be held responsible for a breach of housing quality standards caused by the family’s failure to pay tenant-provided utilities or appliances, or damages to the dwelling unit or premises beyond ordinary wear and tear caused by any member of the household or guest is responsible for any Housing Quality Standards (HQS) breach caused by the family as described in 24 CFR Section 982.404(b).

PHA Policy
The tenant is responsible to notify the owner in writing of any/all items needing repair in the apartment or other issues related to damage or inoperability in the apartment, whether they are tenant caused or the result of normal wear and tear.

6. The family must allow the PHA to inspect the unit at reasonable times and after reasonable notice, as described in Chapter 8 of this plan.

7. The family must not commit any serious violation of the lease.

PHA Policy
The PHA will determine if a family has committed serious violations of the lease based on available evidence, including but not limited to, a court-ordered eviction, or an owner’s notice to evict, police reports, and affidavits from the owner, neighbors, or other credible parties with direct knowledge.

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Unlimited copies may be made for internal use. Page 5-10 Serious lease violations will include, but not be limited to, nonpayment of rent, disturbance of neighbors, destruction of property, or living or housekeeping habits that cause damage to the unit or premises, pose a safety hazard, or are criminal activities.

Generally, the criterion to be used will be whether or not the reason for the eviction was the fault of the tenant or guests. Any incidents of, or criminal activity related to, domestic violence, dating violence, sexual assault, stalking, or human trafficking will not be construed as serious lease violations by the victim [42 U.S.C. § 14043e-11(b)(3)(A); 24 CFR 5.2005(c)(1)].

8. The family must notify the PHA and the owner before moving out of the unit or terminating the lease.

PHA Policy
The family must comply with lease requirements regarding written notice to the owner.

The family must provide written notice to the PHA at the same time the owner is notified, but no less than 30 days. The family must request PHA approval to move and comply with PHA’s transfer and portability procedures. The family must submit the request to move in writing at least sixty (60) days before the requested lease termination/move out date.

9. The family must promptly give the PHA a copy of any owner eviction notice within 10 business days.

PHA Policy
The family must promptly provide to the PHA a copy of any rent increase notice, notice of lease violation, or other official notice served on the family by the landlord, including notices of rent increase and notices of lease violation.

The family must promptly provide to the PHA a copy of any notice served to the family by the landlord.

10. The family must use the assisted unit for residence by the family. The unit must be the family’s only residence.

The composition of the assisted family residing in the unit must be approved by the PHA.

The family must promptly notify the PHA in writing of the birth, adoption, or court-awarded custody of a child. The family must request PHA approval to add any other family member as an occupant of the unit in advance. A criminal background will be conducted prior to adding any member to the household if the member is age 18 or older. No other person(s) (i.e., nobody but members of the assisted family) may reside in the unit (except for a foster child or live-in aide as provided below).

PHA Policy
The request to add a family member must be submitted in writing and approved prior to the person moving into the unit. The PHA will determine eligibility of the new member in accordance with the policies in Chapter 3.

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11. The family must promptly notify the PHA in writing if any family member no longer lives in the unit.

PHA Policy
The notification of a change in household size must be submitted in writing and may require PHA approval prior to the person being removed from the household.

12. If the PHA has given approval, a foster child or a live-in aide may reside in the unit. The PHA has the discretion to adopt reasonable policies concerning residency by a foster child or a live-in aide, and to define when PHA consent may be given or denied. For policies related to the request and approval/disapproval of foster children, foster adults, and live-in aides, see Chapter 3 (Sections I.K and I.M), and Chapter 11 (Section II.B).

13. Members of the household may engage in legal profitmaking activities in the unit, but only if such activities are incidental to primary use of the unit for residence by members of the family.

14. The family must not sublease or let the unit.

PHA Policy
Subleasing includes receiving payment to cover rent and utility costs by a person living in the unit who is not listed as a household member.

15. The family must not assign the lease or transfer the unit.

16. The family must supply any information or certification requested by the PHA to verify that the family is living in the unit, or related to family absence from the unit, including any PHArequested information or certification for the purposes of family absences. The family must cooperate with the PHA for this purpose. The family must promptly notify the PHA of absence from the unit.

PHA Policy
Notice is required under this provision when any family member will be absent from the unit for an extended period. An extended period is defined as any period greater than 30 calendar days. Written notice must be provided to the PHA prior to the start of the extended absence.

17. The family must not own or have any interest in the unit (other than in a cooperative and owners of a manufactured home leasing a manufactured home space).

18. Family members must not commit fraud, bribery, or any other corrupt or criminal act in connection with the program (See Chapter 14, Program Integrity for additional information).

19. Family members must not engage in drug-related criminal activity or violent criminal activity or other criminal activity that threatens the health, safety or right to peaceful enjoyment of other residents and persons residing in the immediate vicinity of the premises (See Chapter 12 for HUD and PHA policies related to drug-related and violent criminal activity).

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20. Members of the household must not engage in abuse of alcohol in a way that threatens the health, safety or right to peaceful enjoyment of the other residents and persons residing in the immediate vicinity of the premises (See Chapter 12 for a discussion of HUD and PHA policies related to alcohol abuse).

21. An assisted family or member of the family must not receive HCV program assistance while receiving another housing subsidy, for the same unit or a different unit under any other federal, state or local housing assistance program.

22. A family must not receive HCV program assistance while residing in a unit owned by a parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving rental of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. [Form HUD-52646, Voucher]

23. The family must immediately notify the PHA in writing of any increases in family income or assets.

24. The family must immediately notify the PHA in writing when a full-time adult student is no longer enrolled and/or attending school full-time.

25. The family must pay utility bills and provide and maintain any appliances that the owner is not required to provide under the lease [Form HUD-52646, Voucher].

26. The family (including each family member) must not damage the unit or premises (other than damage from ordinary wear and tear) or permit any guest to damage the unit or premises.

27. The family agrees not to pay the owner/landlord any additional compensation (either monetary or other) other than that which is approved by the lease or approved by the PHA.

28. The family must not engage in or threaten abusive or violent behavior towards any PHA employee or representative.

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5-II.A. OVERVIEW
The PHA must establish subsidy standards that determine the number of bedrooms needed for families of different sizes and compositions. This part presents the policies that will be used to determine the family unit size (also known as the voucher size) a particular family should receive, and the policies that govern making exceptions to those standards. The PHA must also establish policies related to the issuance of the voucher, to the voucher term, and to any extensions of the voucher term.
5-II.B. DETERMINING FAMILY UNIT (VOUCHER) SIZE [24 CFR 982.402] For each family, the PHA determines the appropriate number of bedrooms under the PHA subsidy standards and enters the family unit size on the voucher that is issued to the family.

The family unit size does not dictate the size of unit the family must actually lease, nor does it determine who within a household will share a bedroom/sleeping room.

The following requirements apply when the PHA determines family unit size:
x The subsidy standards must provide for the smallest number of bedrooms needed to house a family without overcrowding.
x The subsidy standards must be consistent with space requirements under the housing quality standards24 CFR 5.703.
x The subsidy standards must be applied consistently for all families of like size and composition.
x A child who is temporarily away from the home because of placement in foster care is considered a member of the family in determining the family unit size.

PHA Policy
If the child is or is expected to be absent from the assisted unit for more than 90 consecutive days, the voucher size will be reduced in accordance with the PHA’s subsidy standards. Temporarily away is defined as any period less than 90 calendar days.

Written notice must be provided to the PHA within 10 days of the child’s removal. x A family that consists of a pregnant woman (with no other persons) must be treated as a two-person family.
x Any live-in aide (approved by the PHA to reside in the unit to care for a family member who is disabled or is at least 50 years of age) must be counted in determining the family unit size;
x Unless a live-in-aide resides with a family, the family unit size for any family consisting of a single person must be either a zero- or one-bedroom unit, as determined under the PHA subsidy standards. An approved live-in aide will not be given a designated bedroom unless necessary by reasonable accommodation.

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The PHA will generally assign one bedroom for each two persons within the household, except in the following circumstances:

Single person families will be allocated a zero or 1-bedroom Space will not be provided for any family member who is absent from the home in excess of 90 consecutive days per calendar year.

The number of bedrooms on the voucher cannot be more than the number of persons in the household.

Foster children/adults will be included in determining unit size only if they will be in the unit for more than 3 uninterrupted months.

Live-in aides will be allocated a separate bedroom.

At admission, the PHA will reference the following chart in determining the appropriate voucher size for a family:

Voucher Size Persons in Household
(Minimum – Maximum)
0 Bedroom 1-2
1 Bedroom 1-2
2 Bedrooms 2-4
3 Bedrooms 4-6
4 Bedrooms 6-8
5 Bedrooms 8-11
PHA Policy
If a family reports a reduction in family size which would result in there being less than one person per bedroom, the household will be given notice that they have 12 months to search for a new unit and referred to opportunities available in other Santa Monica affordable housing programs, such as the Affordable Housing Production Program. At the end of the 12 months, the subsidy size will be reduced to no more than one bedroom per person unless necessary by reasonable accommodation. Proof of effort must be provided at annual recertification.

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In determining family unit size for a particular family, the PHA may grant an exception to its established subsidy standards if the PHA determines that the exception is justified by the age, sex, health, handicap, or relationship of family members or other personal circumstances [24 CFR 982.402(b)(8)]. Reasons may include, but are not limited to:
x A need for an additional bedroom for medical equipment x A need for a separate bedroom for reasons related to a family member’s disability, medical or health condition
For a single person who is not elderly, disabled, or a remaining family member, an exception cannot override the regulatory limit of a zero or one bedroom [24 CFR 982.402(b)(8)].

PHA Policy
The PHA will consider granting an exception for any of the reasons specified in the regulation: the age, sex, health, handicap, or relationship of family members or other personal circumstances.

The family must request any exception to the subsidy standards in writing, which will include email. The request must explain the need or justification for a larger family unit size, and must include PHA required documentation. Requests based on health-related reasons must be verified by a knowledgeable professional source (e.g., doctor or health professional), unless the disability and the disability–related need for accommodation is readily apparent or otherwise known. The family’s continued need for an additional bedroom due to special medical equipment must be re-verified at annual reexamination.

After a request for an exception is presented, the PHA will respond in writing, acknowledging receipt of the request, within 10 business days.

Based on the verified need for the exception or the absence thereof, the PHA will render its decision within a reasonable period of time. If a participant family’s request is denied, the notice will inform the family of their right to request an informal review.

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When a family is selected from the waiting list (or as a special admission as described in Chapter 4), or when a participant family wants to move to another unit, the PHA issues a Housing Choice Voucher, form HUD-52646. This chapter deals only with voucher issuance for applicants. For voucher issuance associated with moves of program participants, please refer to Chapter 10.

The voucher is the family’s authorization to search for housing. It specifies the unit size for which the family qualifies and includes both the date of voucher issuance and date of expiration. It contains a brief description of how the program works and explains the family obligations under the program. The voucher is evidence that the PHA has determined the family to be eligible for the program, and that the PHA expects to have money available to subsidize the family if the family finds an approvable unit. However, the PHA does not have any liability to any party by the issuance of the voucher, and the voucher does not give the family any right to participate in the PHA’s housing choice voucher program [Voucher, form HUD52646] The PHA must issue the family a voucher within.

A voucher can be issued to an applicant family only after the PHA has determined that the family is eligible for the program based on verification of information received within the 120 days prior to issuance [24 CFR 982.201(e)] and after the family has attended an oral briefing [HCV 8-1].

PHA Policy
Vouchers will be issued to eligible applicants immediately following the mandatory briefing.

The PHA should have sufficient funds to house an applicant before issuing a voucher. If funds are insufficient to house the family at the top of the waiting list, the PHA must wait until it has adequate funds before it calls another family from the list [HCV GB p. 8-10].

PHA Policy
Prior to issuing any vouchers, the PHA will determine whether it has sufficient funding in accordance with the policies in Part VIII of Chapter 16.

If the PHA determines that there is insufficient funding after a voucher has been issued, the PHA may rescind the voucher and place the affected family back on the waiting list.

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Voucher Term [24 CFR 982.303]
The initial term of a voucher must be at least 60 calendar days. The initial term must be stated on the voucher [24 CFR 982.303(a)].

PHA Policy
The initial voucher term will be 180 calendar days.

The family must submit a Request for Tenancy Approval and proposed lease within the 180-day period unless the PHA grants an extension.

Extensions of Voucher Term [24 CFR 982.303(b)]
The PHA has the authority to grant extensions of search time, to specify the length of an extension, and to determine the circumstances under which extensions will be granted. There is no limit on the number of extensions that the PHA can approve. Discretionary policies related to extension and expiration of search time must be described in the PHA’s administrative plan [24 CFR 982.54].

PHAs must approve additional search time if needed as a reasonable accommodation to make the program accessible to and usable by a person with disabilities. The extension period must be reasonable for the purpose.

The family must be notified in writing of the PHA’s decision to approve or deny an extension.

The PHA’s decision to deny a request for an extension of the voucher term is not subject to informal review [24 CFR 982.554(c)(4)].

PHA Policy
The PHA will automatically approve one 60-day extension upon written request from the family, except in cases of incoming billable portability vouchers. For additional information regarding extensions of portability vouchers, please see Chapter 15.

The PHA will approve additional extensions only in the following circumstances:

It is necessary as a reasonable accommodation for a person with disabilities.

It is necessary due to reasons beyond the family’s control, as determined by the PHA. Following is a list of extenuating circumstances that the PHA may consider in making its decision. The presence of these circumstances does not guarantee that an extension will be granted:

Serious illness or death in the family
Other family emergency
Obstacles due to employment
Whether the family has already submitted requests for tenancy approval that were not approved by the PHA

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Any request for an additional extension must include the reason(s) an additional extension is necessary. The PHA will require the family to provide documentation to support the request including a proof of effort form.

All requests for extensions to the voucher term must be made in writing and submitted to the PHA prior to the expiration date of the voucher.

The PHA will decide whether to approve or deny an extension request within 10 business days of the date the request is received, and will immediately provide the family written notice of its decision.

Suspensions of Voucher Term [24 CFR 982.303(c)]
The PHA must provide for suspension of the initial or any extended term of the voucher from the date the family submits a request for PHA approval of the tenancy until the date the PHA notifies the family in writing whether the request has been approved or denied.

PHA Policy
The term is suspended (tolled) while a Request for Tenancy Approval (RTA) is pending for up to 30 days. In the event HQS deficiencies must be cured, the term may be suspended for up to 60 days).

Expiration of Voucher Term
Once a family’s housing choice voucher term (including any extensions) expires, the family is no longer eligible to search for housing under the program. If the family still wishes to receive assistance, the PHA may require that the family reapply, or may place the family on the waiting list with a new application date but without requiring reapplication. Such a family does not become ineligible for the program on the grounds that it was unable to locate a unit before the voucher expired [HCV GB p. 8-13].

PHA Policy
If an applicant family’s voucher term or extension expires before the PHA has approved a tenancy, the PHA will require the family to reapply for assistance. Within 10 business days after the expiration of the voucher term or any extension, the PHA will notify the family in writing that the voucher term has expired and that the family must reapply when the waiting list is open in order to be placed on the waiting list.

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After this date, the PHA will follow policies as outlined in Chapter 6.B. of the model policy.

Chapter 6.A.

INCOME AND SUBSIDY DETERMINATIONS
[24 CFR Part 5, Subparts E and F; 24 CFR 982]

INTRODUCTION
This chapter is applicable prior to the PHA’s HOTMA 102/104 compliance date. After this date, the PHA will follow policies as outlined in Chapter 6.B. of the model policy.

A family’s income determines eligibility for assistance and is also used to calculate the family’s payment and the PHA’s subsidy. The PHA will use the policies and methods described in this chapter to ensure that only eligible families receive assistance and that no family pays more or less than its obligation under the regulations. This chapter describes HUD regulations and PHA policies related to these topics in three parts as follows:
x Part I: Annual Income. HUD regulations specify the sources of income to include and exclude to arrive at a family’s annual income. These requirements and PHA policies for calculating annual income are found in Part I.
x Part II: Adjusted Income. Once annual income has been established HUD regulations require the PHA to subtract from annual income any of five mandatory deductions for which a family qualifies. These requirements and PHA policies for calculating adjusted income are found in Part II.
x Part III: Calculating Family Share and PHA Subsidy. This part describes the statutory formula for calculating total tenant payment (TTP), the use of utility allowances, and the methodology for determining PHA subsidy and required family payment.

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6A-I.A. OVERVIEW
The general regulatory definition of annual income shown below is from 24 CFR 5.609.

5.609 Annual income.
(a) Annual income means all amounts, monetary or not, which:
(1) Go to, or on behalf of, the family head or spouse (even if temporarily absent) or to any other family member; or
(2) Are anticipated to be received from a source outside the family during the 12-month period following admission or annual reexamination effective date; and (3) Which are not specifically excluded in paragraph [5.609(c)]. (4) Annual income also means amounts derived (during the 12-month period) from assets to which any member of the family has access.

In addition to this general definition, HUD regulations establish policies for treating specific types of income and assets. The full texts of those portions of the regulations are provided in exhibits at the end of this chapter as follows:
x Annual Income Inclusions (Exhibit 6-1)
x Annual Income Exclusions (Exhibit 6-2)
x Treatment of Family Assets (Exhibit 6-3)
x The Effect of Welfare Benefit Reduction (Exhibit 6-4) Sections 6-I.B and 6-I.C discuss general requirements and methods for calculating annual income. The rest of this section describes how each source of income is treated for the purposes of determining annual income. HUD regulations present income inclusions and exclusions separately [24 CFR 5.609(b) and 24 CFR 5.609(c)]. In this plan, however, the discussions of income inclusions and exclusions are integrated by topic (e.g., all policies affecting earned income are discussed together in section 6-I.D). Verification requirements for annual income are discussed in Chapter 7.A.

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Income received by all family members must be counted unless specifically excluded by the regulations. It is the responsibility of the head of household to report changes in family composition. The rules on which sources of income are counted vary somewhat by family member. The chart below summarizes how family composition affects income determinations.

Summary of Income Included and Excluded by Person
Live-in aides Income from all sources is excluded [24 CFR 5.609(c)(5)].

Foster child or foster adult Income from all sources is excluded [24 CFR 5.609(c)(2)].

Head, spouse, or cohead
Other adult family members
All sources of income not specifically excluded by the
regulations are included.

Children under 18 years of age Employment income is excluded [24 CFR 5.609(c)(1)].

All other sources of income, except those specifically
excluded by the regulations, are included.

Full-time students 18 years of
age or older (not head,
spouse, or cohead)
Employment income above $480/year is excluded [24 CFR

5.609(c)(11)].

All other sources of income, except those specifically
excluded by the regulations, are included.

Temporarily Absent Family Members
The income of family members approved to live in the unit will be counted, even if the family member is temporarily absent from the unit [HCV GB, p. 5-18].

PHA Policy
Generally an individual who is or is expected to be absent from the assisted unit for 90 consecutive days or less is considered temporarily absent and continues to be considered a family member. Generally an individual who is or is expected to be absent from the assisted unit for more than 90 consecutive days is considered permanently absent and no longer a family member. Exceptions to this general policy are discussed below.

It is the responsibility of the head of household to report changes in family composition.

Absent Students
PHA Policy
When someone who has been considered a family member attends school away from home resides with the family during school recess, the person will not be considered a family member as long as the person’s stay meets the policy regarding guests as set forth in Chapter 3-I.J..

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Children temporarily absent from the home as a result of placement in foster care are considered members of the family [24 CFR 5.403].

PHA Policy
If a child has been placed in foster care, the head of household will notify the PHA in writing and provide written verification from the appropriate agency whether and when the child is expected to return to the home. If the agency confirms that the child has been permanently removed from the home, the child will not be counted as a family member.

Absent Head, Spouse, or Cohead
PHA Policy
An employed head, spouse, or cohead absent from the unit more than 90 consecutive days due to employment will continue to be considered a family member,with the exception of military personnel as required by the Service Members Civil Relief Act (SCRA) [50 U.S.C. § 101 et seq. SCRA § 508 (b)].

Family Members Permanently Confined for Medical Reasons If a family member is confined to a nursing home or hospital on a permanent basis, that person is no longer considered a family member and the income of that person is not counted [HCV GB, p. 5-22].

PHA Policy
The PHA will request verification from a responsible medical professional and will use this determination. If the verification indicates that the family member will be permanently confined to a nursing home, the family will be considered permanently absent. If the responsible medical professional cannot provide a determination, the person generally will be considered temporarily absent. At the family’s request, this may be re-evaluated after 3 months. The family may present evidence that the family member is confined on a permanent basis and request that the person not be considered a family member.

When an individual who has been counted as a family member is determined permanently absent, the family is eligible for the medical expense deduction only if the remaining head, spouse, or cohead qualifies as an elderly person or a person with disabilities.

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PHA Policy
Dependents that are subject to a joint custody arrangement will be considered a member of the family, if they live with the applicant or participant family 50 percent or more of the time.

When more than one applicant or participant family is claiming the same dependents as family members, the family with primary custody at the time of the initial examination or reexamination will be able to claim the dependents and receive the dependent allowance/deduction. If there is a dispute about which family should claim them, the PHA will make the determination based on available documents such as court orders, school records, or an IRS return showing which family has claimed the child for income tax purposes, or school/childcare records.

Caretakers for a Child
PHA Policy
The approval of a caretaker is at the owner and PHA’s discretion and subject to the owner and PHA’s screening criteria. If neither a parent nor a designated guardian remains in a household receiving HCV assistance, the PHA will take the following actions.
(1) If a responsible agency has determined that another adult is to be brought into the assisted unit to care for a child for an indefinite period, the designated caretaker will not be considered a family member until a determination of custody or legal guardianship is made.
(2) If a caretaker has assumed responsibility for a child without the involvement of a responsible agency or formal assignment of custody or legal guardianship, the caretaker will be treated as a visitor for 90 days. After the 90 days has elapsed, the caretaker will be considered a family member unless information is provided that would confirm that the caretaker’s role is temporary. In such cases the PHA will extend the caretaker’s status as an eligible visitor and review the status in 30 days. (3) At any time that custody or guardianship legally has been awarded to a caretaker, the housing choice voucher will be transferred to the caretaker and the income of that caretaker should be counted. All other eligibility criteria apply to the caretaker as well.
(4) During any period that a caretaker is considered a visitor, the income of the caretaker is not counted in annual income and the caretaker does not qualify the family for any deductions from income.

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The PHA is required to count all income “anticipated to be received from a source outside the family during the 12-month period following admission or annual reexamination effective date” [24 CFR 5.609(a)(2)]. Policies related to anticipating annual income are provided below.

Basis of Annual Income Projection
The PHA generally will use current circumstances to determine anticipated income for the coming 12-month period. HUD authorizes the PHA to use other than current circumstances to anticipate income when:
x An imminent change in circumstances is expected [HCV GB, p. 5-17] x It is not feasible to anticipate a level of income over a 12-month period (e.g., seasonal or cyclic income) [24 CFR 5.609(d)]
x The PHA believes that past income is the best available indicator of expected future income [24 CFR 5.609(d)]
PHAs are required to use HUD’s Enterprise Income Verification (EIV) system in its entirety as a third-party source to verify employment and income information, and to reduce administrative subsidy payment errors in accordance with HUD administrative guidance [24 CFR 5.233(a)(2)].

HUD allows PHAs to use tenant-provided documents (pay stubs) dated within 120 days of the date received by the PHA to project income once EIV data has been received in such cases where the family does not dispute the EIV employer data and where the PHA does not determine it is necessary to obtain additional third-party data. The PHA may also accept a statement dated within the appropriate benefit year for fixed income sources.

PHA Policy
When EIV is obtained and the family does not dispute the EIV employer data, the PHA will use current tenant-provided documents to project annual income. When the tenant-provided documents are pay stubs, the PHA will make every effort to obtain 3 current and consecutive pay stubs dated within the last 60 days.

The PHA will obtain written and/or oral third-party verification in accordance with the verification requirements and policy in Chapter 7 in the following cases:

If EIV or other UIV data is not available,
If the family disputes the accuracy of the EIV employer data, and/or If the PHA determines additional information is needed.

In such cases, the PHA will review and analyze current data to anticipate annual income.

In all cases, the family file will be documented with a clear record of the reason for the decision, and a clear audit trail will be left as to how the PHA annualized projected income.

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Unlimited copies may be made for internal use. Page 6A-7 When the PHA cannot readily anticipate income based upon current circumstances (e.g., in the case of seasonal employment, unstable working hours, or suspected fraud), the PHA will review and analyze historical data for patterns of employment, paid benefits, and receipt of other income and use the results of this analysis to establish annual income.

Any time current circumstances are not used to project annual income, a clear rationale for the decision will be documented in the file. In all such cases the family may present information and documentation to the PHA to show why the historic pattern does not represent the family’s anticipated income.

Known Changes in Income
If the PHA verifies an upcoming increase or decrease in income, annual income will be calculated by applying each income amount to the appropriate part of the 12-month period.

Example: An employer reports that a full-time employee who has been receiving $8/hour will begin to receive $8.25/hour in the eighth week after the effective date of the reexamination. In such a case the PHA would calculate annual income as follows:
($8/hour × 40 hours × 7 weeks) + ($8.25 × 40 hours × 45 weeks).

The family may present information that demonstrates that implementing a change before its effective date would create a hardship for the family. In such cases the PHA will calculate annual income using current circumstances and then require an interim reexamination when the change actually occurs. This requirement will be imposed even if the PHA’s policy on reexaminations does not require interim reexaminations for other types of changes.

When tenant-provided third-party documents are used to anticipate annual income, they will be dated within 120 days of the date received by the PHA. Statements dated within the appropriate benefit year will be accepted for fixed income sources.

Projecting Income
In HUD’s EIV webcast of January 2008, HUD made clear that PHAs are not to use EIV quarterly wages to project annual income.

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Types of Earned Income Included in Annual Income
Wages and Related Compensation
The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services is included in annual income [24 CFR 5.609(b)(1)].

PHA Policy
For persons who regularly receive bonuses or commissions, the PHA will verify and then average amounts received for the two years preceding admission or reexamination. If only a one-year history is available, the PHA will use the prior year amounts. In either case the family may provide, and the PHA will consider, a credible justification for not using this history to anticipate future bonuses or commissions. If a new employee has not yet received any bonuses or commissions, the PHA will count only the amount estimated by the employer. The file will be documented appropriately.

Some Types of Military Pay
All regular pay, special pay and allowances of a member of the Armed Forces are counted [24 CFR 5.609(b)(8)] except for the special pay to a family member serving in the Armed Forces who is exposed to hostile fire [24 CFR 5.609(c)(7)].

Types of Earned Income Not Counted in Annual Income
Temporary, Nonrecurring, or Sporadic Income [24 CFR 5.609(c)(9)] This type of income (including gifts) is not included in annual income. Sporadic income includes temporary payments from the U.S. Census Bureau for employment lasting no longer than 180 days [Notice PIH 2009-19].

PHA Policy
Temporary income is income that is received for a period of no more than 60 days in any 12- month period and cannot be reliably anticipated to reoccur. For example, the earned income of an individual who works one or more temporary positions which are not anticipated to exceed 60 cumulative days in any 12-month period, is temporary income.

This does not include an individual whose field of employment is short term but recurring in nature, in which case the PHA may use previous 12 to a maximum of 36 months of actual earnings to calculate income, if the family member intends to continue in the same type of employment.

Nonrecurring income is income that is received one time only and is not anticipated to reoccur in any 12-month period. For example, a one-time gift of $100 from a daughter to her elderly mother for her birthday would be considered nonrecurring income.

Sporadic income is income that is not received periodically and cannot be reliably predicted. For example, the income of an individual who works occasionally as a handyman, or a person who gains income from recycling cans, would be considered

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Unlimited copies may be made for internal use. Page 6A-9 sporadic if future work could not be anticipated and no historic, stable pattern of income existed. (See “Regular Contributions or Gifts” for definition of regular income.) Children’s Earnings
Employment income earned by children (including foster children) under the age of 18 years is not included in annual income [24 CFR 5.609(c)(1)]. (See Eligibility chapter for a definition of foster children.)
Certain Earned Income of Full-Time Students
Earnings in excess of $480 for each full-time student 18 years old or older (except for the head, spouse, or cohead) are not counted [24 CFR 5.609(c)(11)]. To be considered “full-time,” a student must be considered “full-time” by an educational institution with a degree or certificate program [HCV GB, p. 5-29].

Income of a Live-in Aide
Income earned by a live-in aide, as defined in [24 CFR 5.403], is not included in annual income [24 CFR 5.609(c)(5)]. (See Eligibility chapter for a full discussion of live-in aides.) Income Earned under Certain Federal Programs
Income from some federal programs is specifically excluded from consideration as income [24 CFR 5.609(c)(17)], including:
x Payments to volunteers under the Domestic Volunteer Services Act of 1973 (42 U.S.C. 5044(g), 5058)
x Awards under the federal work-study program (20 U.S.C. 1087 uu) x Payments received from programs funded under Title V of the Older Americans Act of 1985 (42 U.S.C. 3056(f))
x Allowances, earnings, and payments to AmeriCorps participants under the National and Community Service Act of 1990 (42 U.S.C. 12637(d))
x Allowances, earnings, and payments to participants in programs funded under the Workforce Investment Act of 1998 (29 U.S.C. 2931)
Resident Service Stipend
Amounts received under a resident service stipend are not included in annual income. A resident service stipend is a modest amount (not to exceed $200 per individual per month) received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development. Such services may include, but are not limited to, fire patrol, hall monitoring, lawn maintenance, resident initiatives coordination, and serving as a member of the PHA’s governing board. No resident may receive more than one such stipend during the same period of time [24 CFR 5.600(c)(8)(iv)].

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Incremental earnings and benefits to any family member resulting from participation in qualifying state or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff are excluded from annual income. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives and are excluded only for the period during which the family member participates in the training program [24 CFR 5.609(c)(8)(v)].

PHA Policy
The PHA defines training program as “a learning process with goals and objectives, generally having a variety of components, and taking place in a series of sessions over a period of time. It is designed to lead to a higher level of proficiency, and it enhances the individual’s ability to obtain employment. It may have performance standards to measure proficiency. Training may include, but is not limited to: (1) classroom training in a specific occupational skill, (2) on-the-job training with wages subsidized by the program, or (3) basic education” [expired Notice PIH 98-2, p. 3].

The PHA defines incremental earnings and benefits as the difference between: (1) the total amount of welfare assistance and earnings of a family member prior to enrollment in a training program, and (2) the total amount of welfare assistance and earnings of the family member after enrollment in the program [expired Notice PIH 98-2, pp. 3–4].

In calculating the incremental difference, the PHA will use as the pre-enrollment income the total annualized amount of the family member’s welfare assistance and earnings reported on the family’s most recently completed HUD-50058.

End of participation in a training program must be reported in accordance with the PHA's interim reporting requirements.

HUD-Funded Training Programs
Amounts received under training programs funded in whole or in part by HUD [24 CFR

5.609(c)(8)(i)] are excluded from annual income. Eligible sources of funding for the training include operating subsidy, Section 8 administrative fees, and modernization, Community Development Block Grant (CDBG), HOME program, and other grant funds received from HUD.

PHA Policy
To qualify as a training program, the program must meet the definition of training program provided above for state and local employment training programs.

Earned Income Tax Credit
Earned income tax credit (EITC) refund payments received on or after January 1, 1991 (26 U.S.C. 32(j)), are excluded from annual income [24 CFR 5.609(c)(17)]. Although many families receive the EITC annually when they file taxes, an EITC can also be received throughout the year. The prorated share of the annual EITC is included in the employee’s payroll check.

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Unlimited copies may be made for internal use. Page 6A-11 6A-I.E. EARNED INCOME DISALLOWANCE FOR PERSONS WITH DISABILITIES [24 CFR 5.617; Streamlining Final Rule (SFR) Federal Register 3/8/16; Notice PIH 2023-27] HOTMA removed the statutory authority for the EID. The EID is available only to families that are eligible for and participating in the program as of December 31, 2023, or before; no new families may be added on or after January 1, 2024. If a family is receiving the EID prior to or on the effective date of December 31, 2023, they are entitled to the full amount of the benefit for a full 24-month period. The policies below are applicable only to such families. No family will still be receiving the EID after December 31, 2025. The EID will sunset on January 1, 2026, and the PHA policies below will no longer be applicable as of that date or when the last qualifying family exhausts their exclusion period, whichever is sooner.

Calculation of the Disallowance
Calculation of the earned income disallowance for an eligible member of a qualified family begins with a comparison of the member’s current income with their “baseline income.” The family member’s baseline income is their income immediately prior to qualifying for the EID.

The family member’s baseline income remains constant throughout the period that they are participating in the EID.

Calculation Method
Initial 12-Month Exclusion
During the initial exclusion period of 12 consecutive months, the full amount (100 percent) of any increase in income attributable to new employment or increased earnings is excluded.

PHA Policy
The initial EID exclusion period will begin on the first of the month following the date an eligible member of a qualified family is first employed or first experiences an increase in earnings.

Second 12-Month Exclusion
During the second exclusion period of 12 consecutive months, the PHA must exclude at least 50 percent of any increase in income attributable to employment or increased earnings.

PHA Policy
During the second 12-month exclusion period, the PHA will exclude 100 percent of any increase in income attributable to new employment or increased earnings.

Lifetime Limitation
The EID has a two-year (24-month) lifetime maximum. The two-year eligibility period begins at the same time that the initial exclusion period begins and ends 24 months later. During the 24- month period, an individual remains eligible for EID even if they begin to receive assistance from a different housing agency, move between public housing and Section 8 assistance, or have breaks in assistance. The EID will sunset on January 1, 2026. In no circumstances will a family member’s exclusion period continue past January 1, 2026.

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Unlimited copies may be made for internal use. Page 6A-12 6A-I.F. BUSINESS INCOME [24 CFR 5.609(b)(2)]
Annual income includes “the net income from the operation of a business or profession.

Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family” [24 CFR 5.609(b)(2)].

Business Expenses
Net income is “gross income less business expense” [HCV GB, p. 5-19].

PHA Policy
To determine business expenses that may be deducted from gross income, the PHA will use current applicable Internal Revenue Service (IRS) rules for determining allowable business expenses [see IRS Publication 535], unless a topic is addressed by HUD regulations or guidance as described below.

Business Expansion
HUD regulations do not permit the PHA to deduct from gross income expenses for business expansion.

PHA Policy
Business expansion is defined as any capital expenditures made to add new business activities, to expand current facilities, or to operate the business in additional locations.

For example, purchase of a street sweeper by a construction business for the purpose of adding street cleaning to the services offered by the business would be considered a business expansion. Similarly, the purchase of a property by a hair care business to open at a second location would be considered a business expansion.

Capital Indebtedness
HUD regulations do not permit the PHA to deduct from gross income the amortization of capital indebtedness.

PHA Policy
Capital indebtedness is defined as the principal portion of the payment on a capital asset such as land, buildings, and machinery. This means the PHA will allow as a business expense interest, but not principal, paid on capital indebtedness.

Negative Business Income
If the net income from a business is negative, no business income will be included in annual income; a negative amount will not be used to offset other family income.

Withdrawal of Cash or Assets from a Business

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PHA Policy
Acceptable investments in a business include cash loans and contributions of assets or equipment. For example, if a member of an assisted family provided an up-front loan of $2,000 to help a business get started, the PHA will not count as income any withdrawals from the business up to the amount of this loan until the loan has been repaid if the loan is documented by parties through an executed loan agreement investments do not include the value of labor contributed to the business without compensation.

Co-owned Businesses
PHA Policy
If a business is co-owned with someone outside the family, the family must document the share of the business it owns. If the family’s share of the income is lower than its share of ownership, the family must document the reasons for the difference.

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Unlimited copies may be made for internal use. Page 6A-14 6A-I.G. ASSETS [24 CFR 5.609(b)(3); 24 CFR 5.603(b)]
Overview
There is no asset limitation for participation in the HCV program. However, HUD requires that the PHA include in annual income the anticipated “interest, dividends, and other net income of any kind from real or personal property” [24 CFR 5.609(b)(3)]. This section discusses how the income from various types of assets is determined. For most types of assets, the PHA must determine the value of the asset in order to compute income from the asset. Therefore, for each asset type, this section discusses:
x How the value of the asset will be determined
x How income from the asset will be calculated
Exhibit 6-1 provides the regulatory requirements for calculating income from assets [24 CFR

5.609(b)(3)], and Exhibit 6-3 provides the regulatory definition of net family assets. This section begins with a discussion of general policies related to assets and then provides HUD rules and PHA policies related to each type of asset.

Optional policies for family self-certification of assets are found in Chapter 7.

General Policies
Income from Assets
The PHA generally will use current circumstances to determine both the value of an asset and the anticipated income from the asset. As is true for all sources of income, HUD authorizes the PHA to use other than current circumstances to anticipate income when (1) an imminent change in circumstances is expected (2) it is not feasible to anticipate a level of income over 12 months or (3) the PHA believes that past income is the best indicator of anticipated income. For example, if a family member owns real property that typically receives rental income but the property is currently vacant, the PHA can take into consideration past rental income along with the prospects of obtaining a new tenant.

PHA Policy
Anytime current circumstances are not used to determine asset income, a clear rationale for the decision will be documented in the file. In such cases the family may present information and documentation to the PHA to show why the asset income determination does not represent the family’s anticipated asset income.

Valuing Assets
The calculation of asset income sometimes requires the PHA to make a distinction between an asset’s market value and its cash value.
x The market value of an asset is its worth in the market (e.g., the amount a buyer would pay for real estate or the total value of an investment account). x The cash value of an asset is its market value less all reasonable amounts that would be incurred when converting the asset to cash.

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Reasonable costs that would be incurred when disposing of an asset include, but are not limited to, penalties for premature withdrawal, broker and legal fees, and settlement costs incurred in real estate transactions [HCV GB, p. 5-28].

Lump-Sum Receipts
Payments that are received in a single lump sum, such as inheritances, capital gains, lottery winnings, insurance settlements, and proceeds from the sale of property, are generally considered assets, not income. However, such lump-sum receipts are counted as assets only if they are retained by a family in a form recognizable as an asset (e.g., deposited in a savings or checking account) [RHIIP FAQs]. (For a discussion of lump-sum payments that represent the delayed start of a periodic payment, most of which are counted as income, see sections 6-I.H and 6-I.I.)
Imputing Income from Assets [24 CFR 5.609(b)(3), Notice PIH 2012-29] When net family assets are $5,000 or less, the PHA will include in annual income the actual income anticipated to be derived from the assets. When the family has net family assets in excess of $5,000, the PHA will include in annual income the greater of (1) the actual income derived from the assets or (2) the imputed income. Imputed income from assets is calculated by multiplying the total cash value of all family assets by an average passbook savings rate as determined by the PHA.
x Note: The HUD field office no longer provides an interest rate for imputed asset income.

The “safe harbor” is now for the PHA to establish a passbook rate within 0.75 percent of a national average.
x The PHA must review its passbook rate annually to ensure that it remains within 0.75 percent of the national average.

PHA Policy
The PHA initially set the imputed asset passbook rate at the national rate established by the Federal Deposit Insurance Corporation (FDIC).

The PHA will review the passbook rate annually. The rate will not be adjusted unless the current PHA rate is no longer within 0.75 percent of the national rate. If it is no longer within 0.75 percent of the national rate, the passbook rate will be set at the current national rate.

The effective date of changes to the passbook rate will be determined at the time of the review.

Determining Actual Anticipated Income from Assets
It may or may not be necessary for the PHA to use the value of an asset to compute the actual anticipated income from the asset. When the value is required to compute the anticipated income from an asset, the market value of the asset is used. For example, if the asset is a property for which a family receives rental income, the anticipated income is determined by

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Unlimited copies may be made for internal use. Page 6A-16 annualizing the actual monthly rental amount received for the property; it is not based on the property’s market value. However, if the asset is a savings account, the anticipated income is determined by multiplying the market value of the account by the interest rate on the account.

Withdrawal of Cash or Liquidation of Investments
Any withdrawal of cash or assets from an investment will be included in income except to the extent that the withdrawal reimburses amounts invested by the family. For example, when a family member retires, the amount received by the family from a retirement investment plan is not counted as income until the family has received payments equal to the amount the family member deposited into the retirement investment plan.

Jointly Owned Assets
The regulation at 24 CFR 5.609(a)(4) specifies that annual income includes “amounts derived (during the 12-month period) from assets to which any member of the family has access.” PHA Policy
If an asset is owned by more than one person and any family member has unrestricted access to the asset, the PHA will count the full value of the asset. A family member has unrestricted access to an asset when they can legally dispose of the asset without the consent of any of the other owners.

If an asset is owned by more than one person, including a family member, but the family member does not have unrestricted access to the asset, the PHA will prorate the asset according to the percentage of ownership. If no percentage is specified or provided for by state or local law, the PHA will prorate the asset evenly among all owners.

Assets Disposed of for Less than Fair Market Value [24 CFR 5.603(b)] HUD regulations require the PHA to count as a current asset any business or family asset that was disposed of for less than fair market value during the two years prior to the effective date of the examination/reexamination, except as noted below.

Minimum Threshold
The HCV Guidebook permits the PHA to set a threshold below which assets disposed of for less than fair market value will not be counted [HCV GB, p. 5-27].

PHA Policy
The PHA will not include the value of assets disposed of for less than fair market value unless the cumulative fair market value of all assets disposed of during the past two years exceeds the gross amount received for the assets by more than $1,000.

When the two-year period expires, the income assigned to the disposed asset(s) also expires. If the two-year period ends between annual recertifications, the family may request an interim recertification to eliminate consideration of the asset(s).

Assets placed by the family in nonrevocable trusts are considered assets disposed of for less than fair market value except when the assets placed in trust were received through settlements or judgments.

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The regulation also specifies that assets are not considered disposed of for less than fair market value if they are disposed of as part of a separation or divorce settlement and the applicant or tenant receives important consideration not measurable in dollar terms.

PHA Policy
All assets disposed of as part of a separation or divorce settlement will be considered assets for which important consideration not measurable in monetary terms has been received. In order to qualify for this exemption, a family member must be subject to a formal separation or divorce settlement agreement established through arbitration, mediation, or court order.

Foreclosure or Bankruptcy
Assets are not considered disposed of for less than fair market value when the disposition is the result of a foreclosure or bankruptcy sale.

Family Declaration
PHA Policy
Families must sign a declaration form at initial certification and each annual recertification identifying all assets that have been disposed of for less than fair market value or declaring that no assets have been disposed of for less than fair market value.

The PHA may verify the value of the assets disposed of if other information available to the PHA does not appear to agree with the information reported by the family.

Types of Assets
Checking and Savings Accounts
For regular checking accounts and savings accounts, cash value has the same meaning as market value. If a checking account does not bear interest, the anticipated income from the account is zero.

PHA Policy
In determining the value of checking account and savings accounts, the PHA will use the current balance.

In determining the anticipated income from an interest-bearing checking or savings account, the PHA will multiply the value of the account by the current rate of interest paid on the account.

Investment Accounts Such as Stocks, Bonds, Saving Certificates, and Money Market Funds Interest or dividends earned by investment accounts are counted as actual income from assets even when the earnings are reinvested. The cash value of such an asset is determined by deducting from the market value any broker fees, penalties for early withdrawal, or other costs of converting the asset to cash.

PHA Policy

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How anticipated income from an investment account will be calculated depends on whether the rate of return is known.

For assets that are held in an investment account with a known rate of return (e.g., savings certificates), asset income will be calculated based on that known rate (market value multiplied by rate of earnings).

When the anticipated rate of return is not known (e.g., stocks), the PHA will calculate asset income based on the earnings for the most recent reporting period.

Equity in Real Property or Other Capital Investments
Equity (cash value) in a property or other capital asset is the estimated current market value of the asset less the unpaid balance on all loans secured by the asset and reasonable costs (such as broker fees) that would be incurred in selling the asset [HCV GB, p. 5-25].

PHA Policy
In determining the equity, the PHA will determine market value by examining recent sales of at least three properties in the surrounding or similar neighborhood that possess comparable factors that affect market value.

The PHA will first use the payoff amount for the loan (mortgage) as the unpaid balance to calculate equity. If the payoff amount is not available, the PHA will use the basic loan balance information to deduct from the market value in the equity calculation.

Equity in real property and other capital investments is considered in the calculation of asset income except for the following types of assets:
x Equity accounts in HUD homeownership programs [24 CFR5.603(b)] x The value of a home currently being purchased with assistance under the HCV program Homeownership Option for the first 10 years after the purchase date of the home [24 CFR

5.603(b), Notice PIH 2012-3]
x Equity in owner-occupied cooperatives and manufactured homes in which the family lives [HCV GB, p. 5-25]
x Equity in real property when a family member’s main occupation is real estate [HCV GB, p. 5-25]. This real estate is considered a business asset, and income related to this asset will be calculated as described in section 6-I.F.
x Interests in Indian Trust lands [24 CFR 5.603(b)]
x Real property and capital assets that are part of an active business or farming operation [HCV GB, p. 5-25]
The PHA must also deduct from the equity the reasonable costs for converting the asset to cash. Using the formula for calculating equity specified above, the net cash value of real

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[Notice PIH 2012-3].

PHA Policy
For the purposes of calculating expenses to convert to cash for real property, the PHA will use ten percent of the market value of the home.

A family may have real property as an asset in two ways: (1) owning the property itself and (2) holding a mortgage or deed of trust on the property. In the case of a property owned by a family member, the anticipated asset income generally will be in the form of rent or other payment for the use of the property. If the property generates no income, actual anticipated income from the asset will be zero.

In the case of a mortgage or deed of trust held by a family member, the outstanding balance (unpaid principal) is the cash value of the asset. The interest portion only of payments made to the family in accordance with the terms of the mortgage or deed of trust is counted as anticipated asset income.

PHA Policy
In the case of capital investments owned jointly with others not living in a family’s unit, a prorated share of the property’s cash value will be counted as an asset unless the PHA determines that the family receives no income from the property and is unable to sell or otherwise convert the asset to cash.

Trusts
A trust is a legal arrangement generally regulated by state law in which one party (the creator or grantor) transfers property to a second party (the trustee) who holds the property for the benefit of one or more third parties (the beneficiaries).

Revocable Trusts
If any member of a family has the right to withdraw the funds in a trust, the value of the trust is considered an asset [HCV GB, p. 5-25]. Any income earned as a result of investment of trust funds is counted as actual asset income, whether the income is paid to the family or deposited in the trust.

Nonrevocable Trusts
In cases where a trust is not revocable by, or under the control of, any member of a family, the value of the trust fund is not considered an asset. However, any income distributed to the family from such a trust is counted as a periodic payment or a lump-sum receipt, as appropriate [24 CFR 5.603(b)]. (Periodic payments are covered in section 6-I.H. Lump-sum receipts are discussed earlier in this section.)
Retirement Accounts
Company Retirement/Pension Accounts

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Unlimited copies may be made for internal use. Page 6A-20 In order to correctly include or exclude as an asset any amount held in a company retirement or pension account by an employed person, the PHA must know whether the money is accessible before retirement [HCV GB, p. 5-26].

While a family member is employed, only the amount the family member can withdraw without retiring or terminating employment is counted as an asset [HCV GB, p. 5-26].

After a family member retires or terminates employment, any amount distributed to the family member is counted as a periodic payment or a lump-sum receipt, as appropriate [HCV GB, p. 5- 26], except to the extent that it represents funds invested in the account by the family member. (For more on periodic payments, see section 6-I.H.) The balance in the account is counted as an asset only if it remains accessible to the family member.

IRA, Keogh, and Similar Retirement Savings Accounts
IRA, Keogh, and similar retirement savings accounts are counted as assets even though early withdrawal would result in a penalty [HCV GB, p. 5-25].

Personal Property
Personal property held as an investment, such as gems, jewelry, coin collections, antique cars, etc., is considered an asset [HCV GB, p. 5-25].

PHA Policy
In determining the value of personal property held as an investment, the PHA will use the family’s estimate of the value. The PHA may obtain use other general practice methods to confirm the value of the asset if there is reason to believe that the family’s estimated value is off by $50 or more.. In the event it is necessary to establish the value of personal property held for investment the family must cooperate with the appraiser, but cannot be charged any costs related to the appraisal.

Generally, personal property held as an investment generates no income until it is disposed of. If regular income is generated (e.g., income from renting the personal property), the amount that is expected to be earned in the coming year is counted as actual income from the asset.

Necessary items of personal property are not considered assets [24 CFR 5.603(b)].

PHA Policy
Necessary personal property consists of only those items not held as an investment, and may include clothing, furniture, household furnishings, jewelry, and vehicles, other than antique/classic and luxury vehicles as described above ,including those specially equipped for persons with disabilities.

Life Insurance
The cash value of a life insurance policy available to a family member before death, such as a whole life or universal life policy, is included in the calculation of the value of the family’s assets [HCV GB 5-25]. The cash value is the surrender value. If such a policy earns dividends or interest

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Unlimited copies may be made for internal use. Page 6A-22 6A-I.H. PERIODIC PAYMENTS
Periodic payments are forms of income received on a regular basis. HUD regulations specify periodic payments that are and are not included in annual income.

Periodic Payments Included in Annual Income
x Periodic payments from sources such as social security, unemployment and welfare assistance, annuities, insurance policies, retirement funds, and pensions. However, periodic payments from retirement accounts, annuities, and similar forms of investments are counted only after they exceed the amount contributed by the family [24 CFR 5.609(b)(4) and (b)(3)].
x Disability or death benefits and lottery receipts paid periodically, rather than in a single lump sum [24 CFR 5.609(b)(4) and HCV, p. 5-14].

Lump-Sum Payments for the Delayed Start of a Periodic Payment Most lump-sums received as a result of delays in processing periodic payments, such as unemployment or welfare assistance, are counted as income. However, lump-sum receipts for the delayed start of periodic social security or supplemental security income (SSI) payments are not counted as income. Additionally, any deferred disability benefits that are received in a lump-sum or in prospective monthly amounts from the Department of Veterans Affairs are to be excluded from annual income [24 CFR 5.609(c)(14)].

PHA Policy
When a delayed-start payment is received and reported during the period in which the PHA is processing an annual reexamination, the PHA will adjust the family share and PHA subsidy retroactively for the period the payment was intended to cover. The family may pay in full any amount due or request to enter into a repayment agreement with the PHA.

Treatment of Overpayment Deductions from Social Security Benefits The PHA must make a special calculation of annual income when the Social Security Administration (SSA) overpays an individual, resulting in a withholding or deduction from their benefit amount until the overpayment is paid in full. The amount and duration of the withholding will vary depending on the amount of the overpayment and the percent of the benefit rate withheld. Regardless of the amount withheld or the length of the withholding period, the PHA must use the reduced benefit amount after deducting only the amount of the overpayment withholding from the gross benefit amount [Notice PIH 2018-24].

Periodic Payments Excluded from Annual Income
x Payments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to the assisted family, who are unable to live alone) [24 CFR

5.609(c)(2)]. Kinship guardianship assistance payments (Kin-GAP) and other similar guardianship payments are treated the same as foster care payments and are likewise excluded from annual income [Notice PIH 2012-1].

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Unlimited copies may be made for internal use. Page 6A-23 PHA Policy
The PHA will exclude payments for the care of foster children and foster adults only if the care is provided through an official arrangement with a local welfare agency [HCV GB, p. 5-18].
x Amounts paid by a state agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home [24 CFR 5.609(c)(16)]. x Amounts received under the Low-Income Home Energy Assistance Program (42 U.S.C. 1626(c)) [24 CFR 5.609(c)(17)].
x Amounts received under the Childcare and Development Block Grant Act of 1990 (42 U.S.C. 9858q) [24 CFR 5.609(c)(17)].
x Earned Income Tax Credit (EITC) refund payments (26 U.S.C. 32(j)) [24 CFR 5.609(c)(17)].

Note: EITC may be paid periodically if the family elects to receive the amount due as part of payroll payments from an employer.
x Lump-sums received as a result of delays in processing Social Security and SSI payments (see section 6-I.H.) [24 CFR 5.609(c)(14)].
x Lump-sums or prospective monthly amounts received as deferred disability benefits from the Department of Veterans Affairs (VA) [24 CFR 5.609(c)(14)].

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Payments in lieu of earnings, such as unemployment and disability compensation, worker’s compensation, and severance pay, are counted as income [24 CFR 5.609(b)(5)] if they are received either in the form of periodic payments or in the form of a lump-sum amount or prospective monthly amounts for the delayed start of a periodic payment. If they are received in a one-time lump sum (as a settlement, for instance), they are treated as lump-sum receipts [24 CFR 5.609(c)(3)]. (See also the discussion of periodic payments in section 6-I.H and the discussion of lump-sum receipts in section 6-I.G.)

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Unlimited copies may be made for internal use. Page 6A-25 6A-I.J. WELFARE ASSISTANCE
Overview
Welfare assistance is counted in annual income. Welfare assistance includes Temporary Assistance for Needy Families (TANF) and any payments to individuals or families based on need that are made under programs funded separately or jointly by federal, state, or local governments [24 CFR 5.603(b)].

Sanctions Resulting in the Reduction of Welfare Benefits [24 CFR 5.615] The PHA must make a special calculation of annual income when the welfare agency imposes certain sanctions on certain families. The full text of the regulation at 24 CFR 5.615 is provided as Exhibit 6-5. The requirements are summarized below. This rule applies only if a family was receiving HCV assistance at the time the sanction was imposed.

Covered Families
The families covered by 24 CFR 5.615 are those “who receive welfare assistance or other public assistance benefits (‘welfare benefits’) from a State or other public agency (’welfare agency’) under a program for which Federal, State or local law requires that a member of the family must participate in an economic self-sufficiency program as a condition for such assistance” [24 CFR 5.615(b)]
Imputed Income
When a welfare agency imposes a sanction that reduces a family’s welfare income because the family commits fraud or fails to comply with the agency’s economic self-sufficiency program or work activities requirement, the PHA must include in annual income “imputed” welfare income.

The PHA must request that the welfare agency provide the reason for the reduction of benefits and the amount of the reduction of benefits. The imputed welfare income is the amount that the benefits were reduced as a result of the sanction.

This requirement does not apply to reductions in welfare benefits: (1) at the expiration of the lifetime or other time limit on the payment of welfare benefits, (2) if a family member is unable to find employment even though the family member has complied with the welfare agency economic self-sufficiency or work activities requirements, or (3) because a family member has not complied with other welfare agency requirements [24 CFR 5.615(b)(2)].

Offsets
The amount of the imputed welfare income is offset by the amount of additional income the family begins to receive after the sanction is imposed. When the additional income equals or exceeds the imputed welfare income, the imputed income is reduced to zero [24 CFR

5.615(c)(4)].

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Unlimited copies may be made for internal use. Page 6A-26 6A-I.K. PERIODIC AND DETERMINABLE ALLOWANCES [24 CFR 5.609(b)(7)] Annual income includes periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from organizations or from persons not residing with an assisted family.

Alimony and Child Support
The PHA must count alimony or child support amounts awarded as part of a divorce or separation agreement.

PHA Policy
The PHA will count court-awarded amounts for alimony and child support unless the PHA verifies that: (1) the payments are not being made, and (2) the family has made reasonable efforts to collect amounts due, including filing with courts or agencies responsible for enforcing payments [HCV GB, pp. 5-23 and 5-47].

Families who do not have court-awarded alimony and child support awards are not required to seek a court award and are not required to take independent legal action to obtain collection.

Regular Contributions or Gifts
The PHA must count as income regular monetary and nonmonetary contributions or gifts from persons not residing with an assisted family [24 CFR 5.609(b)(7)]. Temporary, nonrecurring, or sporadic income and gifts are not counted [24 CFR 5.609(c)(9)].

PHA Policy
Any contribution or gift received more than three times per year will be considered a “regular” contribution or gift, unless the amount is less than $100 per occurrence. This includes rent and utility payments made on behalf of the family and other cash or noncash contributions provided on a regular basis.

Examples of regular contributions include: (1) regular payment of a family’s bills (e.g., utilities, telephone, rent, credit cards, and car payments), (2) cash or other liquid assets provided to any family member on a regular basis, and (3) “in-kind” contributions such as groceries and clothing provided to a family on a regular basis.

Nonmonetary contributions will be valued at the cost of purchasing the items, as determined by the PHA. For contributions that may vary from month to month (e.g., utility payments), the PHA will include an average amount based upon past history. . A family benefit that is used exclusively by the family, but not titled to the family (i.e., automobile, storage unit), will be counted as in-kind income. The income would include insurance, car payments, maintenance, and other vehicle expenses that are regularly paid by someone outside of the assisted household.

If the family’s expenses exceed its known income, the PHA will question the family about contributions and gifts.

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Unlimited copies may be made for internal use. Page 6A-27 6A-I.L. STUDENT FINANCIAL ASSISTANCE [24 CFR 5.609(b)(9); Notice PIH 2015-21] In 2005, Congress passed a law (for Section 8 programs only) requiring that certain student financial assistance be included in annual income. Prior to that, the full amount of student financial assistance was excluded. For some students, the full exclusion still applies.

Student Financial Assistance Included in Annual Income [24 CFR 5.609(b)(9); FR 4/10/06; Notice PIH 2015-21]
The regulation requiring the inclusion of certain student financial assistance applies only to students who satisfy all of the following conditions:
x They are enrolled in an institution of higher education, as defined under the Higher Education Act (HEA) of 1965.
x They are seeking or receiving Section 8 assistance on their own—that is, apart from their parents—through the HCV program, the project-based voucher program, or the moderate rehabilitation program.
x They are under 24 years of age OR they have no dependent children.

For students who satisfy these three conditions, any financial assistance in excess of tuition and any other required fees and charges received: (1) under the 1965 HEA, (2) from a private source, or (3) from an institution of higher education, as defined under the 1965 HEA, must be included in annual income.

To determine annual income in accordance with the above requirements, the PHA will use the definitions of dependent child, institution of higher education, and parents in section 3-II.E, along with the following definitions [FR 4/10/06, pp. 18148-18150]:
x Assistance under the Higher Education Act of 1965 includes Pell Grants, Federal Supplement Educational Opportunity Grants, Academic Achievement Incentive Scholarships, State Assistance under the Leveraging Educational Assistance Partnership Program, the Robert G.

Byrd Honors Scholarship Program, and Federal Work Study programs. x Assistance from private sources means assistance from nongovernmental sources, including parents, guardians, and other persons not residing with the student in an HCV assisted unit. x Tuition and fees are defined in the same manner in which the Department of Education defines tuition and fees [Notice PIH 2015-21].
- This is the amount of tuition and required fees covering a full academic year most frequently charged to students.
- The amount represents what a typical student would be charged and may not be the same for all students at an institution.
- If tuition is charged on a per-credit-hour basis, the average full-time credit hour load for an academic year is used to estimate average tuition.

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Unlimited copies may be made for internal use. Page 6A-28 - Required fees include all fixed-sum charges that are required of a large proportion of all students. Examples include, but are not limited to, writing and science lab fees and fees specific to the student’s major or program (i.e., nursing program). - Expenses related to attending an institution of higher education must not be included as tuition. Examples include, but are not limited to, room and board, books, supplies, meal plans, transportation and parking, student health insurance plans, and other non-fixedsum charges.

Student Financial Assistance Excluded from Annual Income [24 CFR 5.609(c)(6)] Any student financial assistance not subject to inclusion under 24 CFR 5.609(b)(9) is fully excluded from annual income under 24 CFR 5.609(c)(6), whether it is paid directly to the student or to the educational institution the student is attending. This includes any financial assistance received by:
x Students residing with parents who are seeking or receiving Section 8 assistance x Students who are enrolled in an educational institution that does not meet the 1965 HEA definition of institution of higher education
x Students who are over 23 AND have at least one dependent child, as defined in section 3-II.E
x Students who are receiving financial assistance through a governmental program not authorized under the 1965 HEA.

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Other exclusions contained in 24 CFR 5.609(c) that have not been discussed earlier in this chapter include the following:
x Reimbursement of medical expenses [24 CFR 5.609(c)(4)] x Amounts received by participants in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred and which are made solely to allow participation in a specific program [24 CFR 5.609(c)(8)(iii)] x Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS) [(24 CFR 5.609(c)(8)(ii)] x Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era [24 CFR

5.609(c)(10)]
x Adoption assistance payments in excess of $480 per adopted child [24 CFR 5.609(c)(12)] x Refunds or rebates on property taxes paid on the dwelling unit [24 CFR 5.609(c)(15)] x Amounts paid by a state agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home [24 CFR 5.609(c)(16)] x Amounts specifically excluded by any other federal statute [24 CFR 5.609(c)(17), FR Notice 5/20/14]. HUD publishes an updated list of these exclusions periodically. It includes:
(a) The value of the allotment provided to an eligible household under the Food Stamp Act of 1977 (7 U.S.C. 2017 (b))
(b) Benefits under Section 1780 of the School Lunch Act and Child Nutrition Act of 1966, including WIC
(c) Payments to volunteers under the Domestic Volunteer Services Act of 1973 (42 U.S.C. 5044(g), 5058)
(d) Payments received under the Alaska Native Claims Settlement Act (43 U.S.C. 1626(c)) (e) Income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes (25 U.S.C. 459e)
(f) Payments or allowances made under the Department of Health and Human Services’ Low-Income Home Energy Assistance Program (42 U.S.C. 8624(f)) (g) Payments received under programs funded in whole or in part under the Workforce Investment Act of 1998 (29 U.S.C. 2931)
(h) Deferred disability benefits from the Department of Veterans Affairs, whether received as a lump sum or in monthly prospective amounts

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Unlimited copies may be made for internal use. Page 6A-30 (i) Income derived from the disposition of funds to the Grand River Band of Ottawa Indians (Pub. L. 94-540, 90 Stat. 2503-04)
(j) Payments, funds, or distributions authorized, established, or directed by the Seneca Nation Settlement Act of 1990 (25 U.S.C. 1774f(b))
(k) A lump sum or periodic payment received by an individual Indian pursuant to the Class Action Settlement Agreement in the United States District Court case entitled Elouise Cobell et al. v. Ken Salazar et al., for a period of one year from the time of receipt of that payment as provided in the Claims Resolution Act of 2010 (l) The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the U. S. Claims Court, the interests of individual Indians in trust or restricted lands, including the first $2,000 per year of income received by individual Indians from funds derived from interests held in such trust or restricted lands (25 U.S.C. 1407-1408)
(m) Benefits under the Indian Veterans Housing Opportunity Act of 2010 (only applies to Native American housing programs)
(n) Payments received from programs funded under Title V of the Older Americans Act of 1985 (42 U.S.C. 3056(f))
(o) Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in In Re Agent Orange product liability litigation, M.D.L. No. 381 (E.D.N.Y.) (p) Payments received under 38 U.S.C. 1833(c) to children of Vietnam veterans born with spinal bifida, children of women Vietnam veterans born with certain birth defects, and children of certain Korean service veterans born with spinal bifida (q) Payments received under the Maine Indian Claims Settlement Act of 1980 (25 U.S.C. 1721)
(r) The value of any childcare provided or arranged (or any amount received as payment for such care or reimbursement for costs incurred for such care) under the Childcare and Development Block Grant Act of 1990 (42 U.S.C. 9858q) (s) Earned income tax credit (EITC) refund payments received on or after January 1, 1991 (26 U.S.C. 32(j))
(t) Payments by the Indian Claims Commission to the Confederated Tribes and Bands of Yakima Indian Nation or the Apache Tribe of Mescalero Reservation (Pub. L. 95-433) (u) Amounts of scholarships funded under Title IV of the Higher Education Act of 1965j, including awards under federal work-study programs or under the Bureau of Indian Affairs student assistance programs (20 U.S.C. 1087uu). For Section 8 programs, the exception found in § 237 of Public Law 109–249 applies and requires that the amount of financial assistance in excess of tuition and mandatory fees shall be considered income in accordance with the provisions codified at 24 CFR 5.609(b)(9), except for

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(v) Allowances, earnings and payments to AmeriCorps participants under the National and Community Service Act of 1990 (42 U.S.C. 12637(d))
(w) Any amount of crime victim compensation (under the Victims of Crime Act) received through crime victim assistance (or payment or reimbursement of the cost of such assistance) as determined under the Victims of Crime Act because of the commission of a crime against the applicant under the Victims of Crime Act (42 U.S.C. 10602) (x) Any amounts in an "individual development account" as provided by the Assets for Independence Act, as amended in 2002
(y) Payments made from the proceeds of Indian tribal trust cases as described in Notice PIH 2013–30, "Exclusion from Income of Payments under Recent Tribal Trust Settlements" (25 U.S.C. 117b(a))
(z) Major disaster and emergency assistance received under the Robert T. Stafford Disaster Relief and Emergency Assistance Act and comparable disaster assistance provided by states, local governments, and disaster assistance organizations (aa) Distributions from an ABLE account, and actual or imputed interest on the ABLE account balance

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Unlimited copies may be made for internal use. Page 6A-32 PART II: ADJUSTED INCOME
6A-II.A. INTRODUCTION
Overview
HUD regulations require PHAs to deduct from annual income any of five mandatory deductions for which a family qualifies. The resulting amount is the family’s adjusted income. Mandatory deductions are found in 24 CFR 5.611.

5.611(a) Mandatory deductions. In determining adjusted income, the responsible entity [PHA] must deduct the following amounts from annual income:
(1) $480 for each dependent;
(2) $400 for any elderly family or disabled family;
(3) The sum of the following, to the extent the sum exceeds three percent of annual income:
(i) Unreimbursed medical expenses of any elderly family or disabled family; (ii) Unreimbursed reasonable attendant care and auxiliary apparatus expenses for each member of the family who is a person with disabilities, to the extent necessary to enable any member of the family (including the member who is a person with disabilities) to be employed.

This deduction may not exceed the earned income received by family members who are 18 years of age or older and who are able to work because of such attendant care or auxiliary apparatus; and
(4) Any reasonable childcare expenses necessary to enable a member of the family to be employed or to further his or her education.

This part covers policies related to these mandatory deductions. Verification requirements related to these deductions are found in Chapter 7.

Anticipating Expenses
PHA Policy
Generally, the PHA will use current circumstances to anticipate expenses. When possible, for costs that are expected to fluctuate during the year (e.g., childcare during school and nonschool periods and cyclical medical expenses), the PHA will estimate costs based on historic data and known future costs.

If a family has an accumulated debt for medical or disability assistance expenses, the PHA will include as an eligible expense the portion of the debt that the family expects to pay during the period for which the income determination is being made. However, amounts previously deducted will not be allowed even if the amounts were not paid as expected in a preceding period. The PHA may require the family to provide documentation of payments made in the preceding year.

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An allowance of $480 is deducted from annual income for each dependent [24 CFR 5.611(a)(1)].

Dependent is defined as any family member other than the head, spouse, or cohead who is under the age of 18 or who is 18 or older and is a person with disabilities or a full-time student.

Foster children, foster adults, and live-in aides are never considered dependents [24 CFR 5.603(b)].
6A-II.C. ELDERLY OR DISABLED FAMILY DEDUCTION
A single deduction of $400 is taken for any elderly or disabled family [24 CFR 5.611(a)(2)]. An elderly family is a family whose head, spouse, cohead, or sole member is 62 years of age or older, and a disabled family is a family whose head, spouse, cohead, or sole member is a person with disabilities [24 CFR 5.403].

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Unlimited copies may be made for internal use. Page 6A-34 6A-II.D. MEDICAL EXPENSES DEDUCTION [24 CFR 5.611(a)(3)(i)] Unreimbursed medical expenses may be deducted to the extent that, in combination with any disability assistance expenses, they exceed three percent of annual income.

The medical expense deduction is permitted only for families in which the head, spouse, or cohead is at least 62 or is a person with disabilities. If a family is eligible for a medical expense deduction, the medical expenses of all family members are counted [VG, p. 28].

Definition of Medical Expenses
HUD regulations define medical expenses at 24 CFR 5.603(b) to mean “medical expenses, including medical insurance premiums, that are anticipated during the period for which annual income is computed, and that are not covered by insurance.” PHA Policy
The most current IRS Publication 502, Medical and Dental Expenses, will be used as a reference to determine the costs that qualify as medical expenses.

Summary of Allowable Medical Expenses from IRS Publication 502 Services of medical professionals
Surgery and medical procedures that are
necessary, legal, noncosmetic
Services of medical facilities
Hospitalization, long-term care, and inhome nursing services Prescription medicines and insulin, but
not nonprescription medicines even if
recommended by a doctor
Improvements to housing directly
related to medical needs (e.g., ramps for
a wheel chair, handrails)
Substance abuse treatment programs
Psychiatric treatment
Ambulance services and some costs of
transportation related to medical
expenses
The cost and care of necessary
equipment related to a medical
condition (e.g., eyeglasses/lenses,
hearing aids, crutches, and artificial
teeth)
Cost and continuing care of necessary
service animals
Medical insurance premiums or the cost
of a health maintenance organization
(HMO)
Note: This chart provides a summary of eligible medical expenses only. Detailed information is provided in IRS Publication 502. Medical expenses are considered only to the extent they are not reimbursed by insurance or some other source.

Families That Qualify for Both Medical and Disability Assistance Expenses PHA Policy
This policy applies only to families in which the head, spouse, or cohead is 62 or older or is a person with disabilities.

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Unlimited copies may be made for internal use. Page 6A-35 When expenses anticipated by a family could be defined as either medical or disability assistance expenses, the PHA will consider them medical expenses unless it is clear that the expenses are incurred exclusively to enable a person with disabilities to work.

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Unlimited copies may be made for internal use. Page 6A-36 6A-II.E. DISABILITY ASSISTANCE EXPENSES DEDUCTION [24 CFR 5.603(b) and 24 CFR 5.611(a)(3)(ii)]
Reasonable expenses for attendant care and auxiliary apparatus for a disabled family member may be deducted if they: (1) are necessary to enable a family member 18 years or older to work, (2) are not paid to a family member or reimbursed by an outside source, (3) in combination with any medical expenses, exceed three percent of annual income, and (4) do not exceed the earned income received by the family member who is enabled to work.

Earned Income Limit on the Disability Assistance Expense Deduction A family can qualify for the disability assistance expense deduction only if at least one family member (who may be the person with disabilities) is enabled to work [24 CFR 5.603(b)].

The disability expense deduction is capped by the amount of “earned income received by family members who are 18 years of age or older and who are able to work” because of the expense [24 CFR 5.611(a)(3)(ii)]. The earned income used for this purpose is the amount verified before any income exclusions are applied.

PHA Policy
The family must identify the family members enabled to work as a result of the disability assistance expenses. In evaluating the family’s request, the PHA will consider factors such as how the work schedule of the relevant family members relates to the hours of care provided, the time required for transportation, the relationship of the family members to the person with disabilities, and any special needs of the person with disabilities that might determine which family members are enabled to work.

When the PHA determines that the disability assistance expenses enable more than one family member to work, the expenses will be capped by the sum of the family members’ incomes.

Eligible Disability Expenses
Examples of auxiliary apparatus are provided in the HCV Guidebook as follows: “Auxiliary apparatus are items such as wheelchairs, ramps, adaptations to vehicles, or special equipment to enable a blind person to read or type, but only if these items are directly related to permitting the disabled person or other family member to work” [HCV GB, p. 5-30].

HUD advises PHAs to further define and describe auxiliary apparatus [VG, p. 30].

Eligible Auxiliary Apparatus
PHA Policy
Expenses incurred for maintaining or repairing an auxiliary apparatus are eligible. In the case of an apparatus that is specially adapted to accommodate a person with disabilities (e.g., a vehicle or computer), the cost to maintain the special adaptations (but not maintenance of the apparatus itself) is an eligible expense. The cost of service animals trained to give assistance to persons with disabilities, including the cost of acquiring the

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Eligible Attendant Care
The family determines the type of attendant care that is appropriate for the person with disabilities.

PHA Policy
Attendant care includes, but is not limited to, reasonable costs for home medical care, nursing services, in-home or center-based care services, interpreters for persons with hearing impairments, and readers for persons with visual disabilities.

Attendant care expenses will be included for the period that the person enabled to work is employed plus reasonable transportation time. The cost of general housekeeping and personal services is not an eligible attendant care expense. However, if the person enabled to work is the person with disabilities, personal services necessary to enable the person with disabilities to work are eligible.

If the care attendant also provides other services to the family, the PHA will prorate the cost and allow only that portion of the expenses attributable to attendant care that enables a family member to work. For example, if the care provider also cares for a child who is not the person with disabilities, the cost of care must be prorated. Unless otherwise specified by the care provider, the calculation will be based upon the number of hours spent in each activity and/or the number of persons under care.

Payments to Family Members
No disability assistance expenses may be deducted for payments to a member of an assisted family [24 CFR 5.603(b)]. However, expenses paid to a relative who is not a member of the assisted family may be deducted if they are not reimbursed by an outside source.

Necessary and Reasonable Expenses
The family determines the type of care or auxiliary apparatus to be provided and must describe how the expenses enable a family member to work. The family must certify that the disability assistance expenses are necessary and are not paid or reimbursed by any other source.

PHA Policy
The PHA determines the reasonableness of the expenses based on typical costs of care or apparatus in the locality. To establish typical costs, the PHA will collect information from organizations that provide services and support to persons with disabilities. A family may present, and the PHA will consider, the family’s justification for costs that exceed typical costs in the area.

Families That Qualify for Both Medical and Disability Assistance Expenses PHA Policy
This policy applies only to families in which the head or spouse is 62 or older or is a person with disabilities.

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Unlimited copies may be made for internal use. Page 6A-39 6A-II.F. CHILDCARE EXPENSE DEDUCTION
HUD defines childcare expenses at 24 CFR 5.603(b) as “amounts anticipated to be paid by the family for the care of children under 13 years of age during the period for which annual income is computed, but only where such care is necessary to enable a family member to actively seek employment, be gainfully employed, or to further his or her education and only to the extent such amounts are not reimbursed. The amount deducted shall reflect reasonable charges for childcare. In the case of childcare necessary to permit employment, the amount deducted shall not exceed the amount of employment income that is included in annual income.” Clarifying the Meaning of Child for This Deduction
Childcare expenses do not include child support payments made to another on behalf of a minor who is not living in an assisted family’s household [VG, p. 26]. However, childcare expenses for foster children that are living in the assisted family’s household are included when determining the family’s childcare expenses [HCV GB, p. 5-29].

Qualifying for the Deduction
Determining Who Is Enabled to Pursue an Eligible Activity PHA Policy
The family must identify the family member(s) enabled to pursue an eligible activity. The term eligible activity in this section means any of the activities that may make the family eligible for a childcare deduction (seeking work, pursuing an education, or being gainfully employed).

In evaluating the family’s request, the PHA will consider factors such as how the schedule for the claimed activity relates to the hours of care provided, the time required for transportation, the relationship of the family member(s) to the child, and any special needs of the child that might help determine which family member is enabled to pursue an eligible activity.

Seeking Work
PHA Policy
If the childcare expense being claimed is to enable a family member to seek employment, the family must provide evidence of the family member’s efforts to obtain employment at each reexamination. The deduction may be reduced or denied if the family member’s job search efforts are not commensurate with the childcare expense being allowed by the PHA.

Furthering Education
PHA Policy
If the childcare expense being claimed is to enable a family member to further their education, the member must be enrolled in school (academic or vocational) or participating in a formal training program. The family member is not required to be a

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Being Gainfully Employed
PHA Policy
If the childcare expense being claimed is to enable a family member to be gainfully employed, the family must provide evidence of the family member’s employment during the time that childcare is being provided. Gainful employment is any legal work activity (full- or part-time) for which a family member is compensated.

Earned Income Limit on Childcare Expense Deduction
When a family member looks for work or furthers their education, there is no cap on the amount that may be deducted for childcare – although the care must still be necessary and reasonable. However, when childcare enables a family member to work, the deduction is capped by “the amount of employment income that is included in annual income” [24 CFR

5.603(b)].

The earned income used for this purpose is the amount of earned income verified after any income exclusions are applied.

When the person who is enabled to work is a full-time student whose earned income above $480 is excluded, childcare costs related to enabling a family member to work may not exceed the portion of the person’s earned income that actually is included in annual income.

The PHA must not limit the deduction to the least expensive type of childcare. If the care allows the family to pursue more than one eligible activity, including work, the cap is calculated in proportion to the amount of time spent working [HCV GB, p. 5-30].

PHA Policy
When the childcare expense being claimed is to enable a family member to work, only one family member’s income will be considered for a given period of time. When more than one family member works during a given period, the PHA generally will limit allowable childcare expenses to the earned income of the lowest-paid member. The family may provide information that supports a request to designate another family member as the person enabled to work.

Eligible Childcare Expenses
The type of care to be provided is determined by the assisted family. The PHA may not refuse to give a family the childcare expense deduction because there is an adult family member in the household that may be available to provide childcare [VG, p. 26].

Allowable Childcare Activities
PHA Policy
For school-age children, costs attributable to public or private school activities during standard school hours are not considered. Expenses incurred for supervised activities

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The costs of general housekeeping and personal services are not eligible. Likewise, childcare expenses paid to a family member who lives in the family’s unit are not eligible; however, payments for childcare to relatives who do not live in the unit are eligible.

If a childcare provider also renders other services to a family or childcare is used to enable a family member to conduct activities that are not eligible for consideration, the PHA will prorate the costs and allow only that portion of the expenses that is attributable to childcare for eligible activities. For example, if the care provider also cares for a child with disabilities who is 13 or older, the cost of care will be prorated.

Unless otherwise specified by the childcare provider, the calculation will be based upon the number of hours spent in each activity and/or the number of persons under care.

Necessary and Reasonable Costs
Childcare expenses will be considered necessary if: (1) a family adequately explains how the care enables a family member to work, actively seek employment, or further their education, and (2) the family certifies, and the childcare provider verifies, that the expenses are not paid or reimbursed by any other source.

PHA Policy
Childcare expenses will be considered for the time required for the eligible activity plus reasonable transportation time. For childcare that enables a family member to go to school, the time allowed may include not more than one study hour for each hour spent in class.

To establish the reasonableness of childcare costs, the PHA will use the schedule of childcare costs from a qualified local entity that either subsidizes childcare costs or licenses childcare providers. Families may present, and the PHA will consider, justification for costs that exceed typical costs in the area.

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Unlimited copies may be made for internal use. Page 6A-42 PART III: CALCULATING FAMILY SHARE AND PHA SUBSIDY
6A-III.A. OVERVIEW OF RENT AND SUBSIDY CALCULATIONS
TTP Formula [24 CFR 5.628]
HUD regulations specify the formula for calculating the total tenant payment (TTP) for an assisted family. TTP is the highest of the following amounts, rounded to the nearest dollar:
x 30 percent of the family’s monthly adjusted income (adjusted income is defined in Part II) x 10 percent of the family’s monthly gross income (annual income, as defined in Part I, divided by 12)
x The welfare rent (in as-paid states only)
x A minimum rent between $0 and $50 that is established by the PHA The PHA has authority to suspend and exempt families from minimum rent when a financial hardship exists, as defined in section 6-III.B.

The amount that a family pays for rent and utilities (the family share) will never be less than the family’s TTP but may be greater than the TTP depending on the rent charged for the unit the family selects.

Welfare Rent [24 CFR 5.628]
PHA Policy
Welfare rent does not apply in this locality.

Minimum Rent [24 CFR 5.630]
PHA Policy
The minimum rent for this locality is $50.00.

Family Share [24 CFR 982.305(a)(5)]
If a family chooses a unit with a gross rent (rent to owner plus an allowance for tenant-paid utilities) that exceeds the PHA’s applicable payment standard: (1) the family will pay more than the TTP, and (2) at initial occupancy the PHA may not approve the tenancy if it would require the family share to exceed 40 percent of the family’s monthly adjusted income. (For a discussion of the application of payment standards, see section 6-III.C.) PHA Subsidy [24 CFR 982.505(b)]
The PHA will pay a monthly housing assistance payment (HAP) for a family that is equal to the lower of (1) the applicable payment standard for the family minus the family’s TTP or (2) the gross rent for the family’s unit minus the TTP. (For a discussion of the application of payment standards, see section 6-III.C.)

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When the PHA subsidy for a family exceeds the rent to owner, the family is due a utility reimbursement. HUD permits the PHA to pay the reimbursement to the family or directly to the utility provider.

PHA Policy
The PHA will generally make utility reimbursements to the family, but in some instances may elect to directly pay the utility provider.

The PHA may make all utility reimbursement payments to qualifying families on a monthly basis or may make quarterly payments when the monthly reimbursement amount is $15.00 or less.

Reimbursements must be made once per calendar-year quarter and must be prorated if the family leaves the program in advance of its next quarterly reimbursement. The PHA must also adopt hardship policies for families for whom receiving quarterly reimbursement would create a financial hardship.

PHA Policy
The PHA will issue all utility reimbursements monthly.

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Unlimited copies may be made for internal use. Page 6A-44 6A-III.B. FINANCIAL HARDSHIPS AFFECTING MINIMUM RENT [24 CFR 5.630] PHA Policy
The financial hardship rules described below do not apply in this jurisdiction because the PHA has established a minimum rent of $50.00.

Overview
If the PHA establishes a minimum rent greater than zero, the PHA must grant an exemption from the minimum rent if a family is unable to pay the minimum rent because of financial hardship.

The financial hardship exemption applies only to families required to pay the minimum rent. If a family’s TTP is higher than the minimum rent, the family is not eligible for a hardship exemption. If the PHA determines that a hardship exists, the family share is the highest of the remaining components of the family’s calculated TTP.

HUD-Defined Financial Hardship
Financial hardship includes the following situations:
(1) The family has lost eligibility for or is awaiting an eligibility determination for a federal, state, or local assistance program. This includes a family member who is a noncitizen lawfully admitted for permanent residence under the Immigration and Nationality Act who would be entitled to public benefits but for Title IV of the Personal Responsibility and Work Opportunity Act of 1996.

PHA Policy
A hardship will be considered to exist only if the loss of eligibility has an impact on the family’s ability to pay the minimum rent.

For a family waiting for a determination of eligibility, the hardship period will end as of the first of the month following: (1) implementation of assistance, if approved, or (2) the decision to deny assistance. A family whose request for assistance is denied may request a hardship exemption based upon one of the other allowable hardship circumstances. (2) The family would be evicted because it is unable to pay the minimum rent.

PHA Policy
For a family to qualify under this provision, the cause of the potential eviction must be the family’s failure to pay rent to the owner or tenant-paid utilities. (3) Family income has decreased because of changed family circumstances, including the loss of employment.
(4) A death has occurred in the family.

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In order to qualify under this provision, a family must describe how the death has created a financial hardship (e.g., because of funeral-related expenses or the loss of the family member’s income).
(5) The family has experienced other circumstances determined by the PHA.

PHA Policy
The PHA has not established any additional hardship criteria.

Implementation of Hardship Exemption
Determination of Hardship
When a family requests a financial hardship exemption, the PHA must suspend the minimum rent requirement beginning the first of the month following the family’s request.

The PHA then determines whether the financial hardship exists and whether the hardship is temporary or long-term.

PHA Policy
The PHA defines temporary hardship as a hardship expected to last 90 days or less.

Long-term hardship is defined as a hardship expected to last more than 90 days.

When the minimum rent is suspended, the family share reverts to the highest of the remaining components of the calculated TTP. The example below demonstrates the effect of the minimum rent exemption.

Example: Impact of Minimum Rent Exemption
Assume the PHA has established a minimum rent of $50.

Family Share – No Hardship Family Share – With Hardship $0
$15
N/A
$50
30% of monthly adjusted income
10% of monthly gross income
Welfare rent
Minimum rent
$0
$15
N/A
$50
30% of monthly adjusted income
10% of monthly gross income
Welfare rent
Minimum rent
Minimum rent applies.

TTP = $50
Hardship exemption granted.

TTP = $15
PHA Policy
To qualify for a hardship exemption, a family must submit a request for a hardship exemption in writing. The request must explain the nature of the hardship and how the hardship has affected the family’s ability to pay the minimum rent. For LEP participants, the PHA will provide appropriate language assistance in submitting this written request, in accordance with the PHA’s LEP Plan.

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No Financial Hardship
If the PHA determines there is no financial hardship, the PHA will reinstate the minimum rent and require the family to repay the amounts suspended.

PHA Policy
The PHA will require the family to repay the suspended amount within 30 calendar days of the PHA’s notice that a hardship exemption has not been granted.

Temporary Hardship
If the PHA determines that a qualifying financial hardship is temporary, the PHA must suspend the minimum rent for the 90-day period beginning the first of the month following the date of the family’s request for a hardship exemption.

At the end of the 90-day suspension period, the family must resume payment of the minimum rent and must repay the PHA the amounts suspended. HUD requires the PHA to offer a reasonable repayment agreement, on terms and conditions established by the PHA. The PHA also may determine that circumstances have changed and the hardship is now a long-term hardship.

PHA Policy
The PHA will enter into a repayment agreement in accordance with the procedures found in Chapter 16 of this plan.

Long-Term Hardship
If the PHA determines that the financial hardship is long-term, the PHA must exempt the family from the minimum rent requirement for so long as the hardship continues. The exemption will apply from the first of the month following the family’s request until the end of the qualifying hardship. When the financial hardship has been determined to be long-term, the family is not required to repay the minimum rent.

PHA Policy
The hardship period ends when any of the following circumstances apply:
(1) At an interim or annual reexamination, the family’s calculated TTP is greater than the minimum rent.
(2) For hardship conditions based on loss of income, the hardship condition will continue to be recognized until new sources of income are received that are at least equal to the amount lost. For example, if a hardship is approved because a family no longer receives a $60/month child support payment, the hardship will continue to exist until the family receives at least $60/month in income from another source or once again begins to receive the child support.

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Unlimited copies may be made for internal use. Page 6A-48 6A-III.C. APPLYING PAYMENT STANDARDS [24 CFR 982.505(c) and Notice PIH 2024-34] Overview
The PHA’s schedule of payment standards is used to calculate housing assistance payments for HCV families. This section covers the application of the PHA’s payment standards. The establishment and revision of the PHA’s payment standard schedule are covered in Chapter 16.

Payment standard is defined as “the maximum monthly assistance payment for a family assisted in the voucher program (before deducting the total tenant payment by the family)” [24 CFR 982.4(b)].

The payment standard for a family is the lower of (1) the payment standard for the family unit size, which is defined as the appropriate number of bedrooms for the family under the PHA’s subsidy standards [24 CFR 982.4(b)], or (2) the payment standard for the size of the dwelling unit rented by the family [24 CFR 982.505(c)(1)].

If the PHA has established an exception payment standard for a designated part of an FMR area in accordance with 24 CFR 982.503 and a family’s unit is located in the designated area, the PHA must use the appropriate payment standard for the exception area [24 CFR 982.505(c)(2)].

The PHA is required to pay a monthly housing assistance payment (HAP) for a family that is the lower of (1) the payment standard for the family minus the family’s TTP or (2) the gross rent for the family’s unit minus the TTP.

If during the term of the HAP contract for a family’s unit, the owner lowers the rent, the PHA will recalculate the HAP using the lower of the initial payment standard or the gross rent for the unit [HCV GB, p. 7-8].

Changes in Payment Standards
When the PHA revises its payment standards during the term of the HAP contract for a family’s unit, it will apply the new payment standards in accordance with HUD regulations. Regulations governing increases and decreases in the payment standard have changed, with a required compliance date of December 3, 2024.

Decreases [24 CFR 982.505(c)(3) and Notice PIH 2024-34] For new HAP contracts, the PHA applies the payment standard in effect at the time of HAP contract execution.

The PHA must administer decreases in the payment standard amount for the family in accordance with the PHA policy as described in the administrative plan and apply the policy consistently to all families.

If a PHA changes its payment standard schedule, resulting in a lower payment standard amount, during the term of a HAP contract, the PHA is not required to reduce the payment standard used to calculate subsidy for families under HAP contract as long as the HAP contract remains in effect.

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Unlimited copies may be made for internal use. Page 6A-49 Changes effective 12/2/24 and earlier: If the PHA does choose to reduce the payment standard for families currently under HAP contract, the initial reduction to the payment standard may not be applied any earlier than the effective date of the family’s second regular reexamination following the effective date of the decrease in the payment standard amount.

Changes effective 12/3/24 and later: If the PHA does choose to reduce the payment standard for families currently under HAP contract, the initial reduction to the payment standard may not be applied any earlier than two years following the effective date of the decrease in the payment standard and only with proper written notice to the family in accordance with 24 CFR 982.505(c)(3)(iii).

At that point, the PHA may either reduce the payment standard to the current amount in effect on the PHA’s payment standard schedule or may reduce the payment standard to another amount that is higher than the normally applicable amount on the schedule. The PHA may also establish different policies for designated areas within their jurisdiction (e.g., different zip code areas).

In any case, the PHA must provide the family with at least 12 months’ notice that the payment standard is being reduced before the effective date of the change. In the written notice, the PHA must state the new payment standard amount, explain that the family’s new payment standard amount will be the greater of the amount listed in the current written notice or the new amount (if any) on the PHA’s payment standard schedule at the end of the 12-month period, and make clear where the family will find the PHA’s payment standard schedule. The PHA’s policy on decreases in the payment standard during the term of the HAP contract apply to all families under HAP contract at the time of the effective date of the decrease in the payment standard within the designated area.

PHA Policy
If a PHA changes its payment standard schedule resulting in a lower payment standard amount, during the term of a HAP contract, the PHA will not reduce the payment standard used to calculate subsidy for families under HAP contract as long as the HAP contract remains in effect.

The PHA will not establish different policies for decreases in the payment standard for designated areas within their jurisdiction.

Increases [24 CFR 982.505(c)(4) and Notice PIH 2024-34] For new HAP contracts, the PHA applies the payment standard in effect at the time of HAP contract execution.

Changes effective 12/2/24 and earlier: If the payment standard is increased during the term of the HAP contract, the increased payment standard will be used to calculate the monthly housing assistance payment for the family beginning on the effective date of the family’s first regular reexamination on or after the effective date of the increase in the payment standard.

Families requiring or requesting interim reexaminations will not have their HAP payments calculated using the higher payment standard until their next annual reexamination [HCV GB, p. 7-8].

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Unlimited copies may be made for internal use. Page 6A-50 Changes effective 12/3/24 and later: If the payment standard is increased during the term of the HAP contract, the increased payment standard will be applied no later than the earliest of:
x The effective date of an increase in the gross rent that would result in an increase in the family share;
x The family’s first regular or interim reexamination; or x One year following the effective date of the increase in the payment standard amount.

The PHA may adopt a policy to apply a payment standard increase at any time earlier than the date calculated above as long as the policy is included in the administrative plan and applied consistently to all families [24 CFR 982.505(c)(5)].

PHA Policy
The PHA will not adopt payment standard increases earlier than the date required by the regulations.

Changes in Family Unit Size (Voucher Size) [24 CFR 982.505(c)(6) and Notice PIH 2024-34] Changes effective 12/2/24 and earlier: Irrespective of any increase or decrease in the payment standard, if the family unit size increases or decreases during the HAP contract term, the new family unit size must be used to determine the payment standard for the family beginning at the family’s first regular reexamination following the change in family unit size.

Changes effective 12/3/24 and later: Irrespective of any increase or decrease in the payment standard, if the family unit size increases or decreases during the HAP contract term, the new family unit size may be used to determine the payment standard immediately but no later than the family’s first regular reexamination following the change in family unit size.

PHA Policy
If the family unit size (voucher size) changes during the term of a HAP contract, the new family unit size will be used to determine the payment standard at the family’s first regular reexamination following the change in family unit size.

Moves
If the family moves to a new unit, or a new HAP contract is executed due to changes in the lease (even if the family remains in place) the current payment standard applicable to the family will be used when the new HAP contract is processed.

Reasonable Accommodation [24 CFR 982.503(d)(5)]
If a family requires a higher payment standard as a reasonable accommodation for a family member who is a person with disabilities, the PHA is allowed to establish a higher payment standard for the family of not more than 120 percent of the published FMR without HUD approval or prior notification to HUD. A PHA may establish a payment standard greater than 120 percent of the applicable FMR as a reasonable accommodation in accordance with 24 CFR part 8, after requesting and receiving HUD approval. See Chapter 16 for more information.

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Unlimited copies may be made for internal use. Page 6A-51 6A-III.D. APPLYING UTILITY ALLOWANCES [24 CFR 982.517]
Overview
A PHA-established utility allowance schedule is used in determining family share and PHA subsidy. A family's utility allowance is determined by the size of dwelling unit leased by a family or the voucher unit size for which the family qualifies using PHA subsidy standards, whichever is the lowest of the two. See Chapter 5 for information on the PHA’s subsidy standards.

For policies on establishing and updating utility allowances, see Chapter 16.

Flat Fees [24 CFR 982.517(b)(2)(iii)]
The PHA may base its utility allowance payments on actual flat fees charged by an owner for utilities that are billed directly by the owner, but only if the flat fee charged by the owner is no greater than the PHA’s applicable utility allowance for the utilities covered by the fee. If the owner charges a flat fee for some but not all utilities, the PHA must pay a separate allowance for any tenant-paid utilities not covered in the flat fee.

PHA Policy
The PHA will not base utility allowance payments on flat fees charged by the owner.

PBV Developments [24 CFR 982.517(b)(2)(iv)]
If a tenant-based voucher holder resides in a project with project-based voucher (PBV) units and the PBV units use a site-specific utility allowance in accordance with PBV regulations, the PHA must use the project-specific utility allowance schedule.

Reasonable Accommodation and Individual Relief
On request from a family that includes a person with disabilities, the PHA must approve a utility allowance which is higher than the applicable amount on the utility allowance schedule if a higher utility allowance is needed as a reasonable accommodation to make the program accessible and usable by the family member with a disability [24 CFR 982.517(e)]. (See Chapter 2 for policies regarding the request and approval of reasonable accommodations.) Further, the PHA may grant requests for individual relief from charges in excess of the utility allowance on reasonable grounds, such as special factors not within control of the resident, as the PHA deems appropriate. The family must request the higher allowance and provide the PHA an explanation of the need for individual relief and an explanation about the amount of additional allowance required [see HCV GB, p. 18-8].

PHAs should develop criteria for granting individual relief, notify residents about the availability of individual relief, and notify participants about the availability of individual relief programs (sometimes referred to as “Medical Baseline discounts”) offered by the local utility company.

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Unlimited copies may be made for internal use. Page 6A-52 PHA Policy
The family must request the higher allowance and provide the PHA with information about the amount of additional allowance required.

The PHA will consider the following criteria as valid reasons for granting individual relief:

The family’s consumption was mistakenly portrayed as excessive due to defects in the meter or errors in the meter reading.

The excessive consumption is caused by a characteristic of the unit or ownersupplied equipment that is beyond the family’s control, such as a particularly inefficient refrigerator or inadequate insulation. The allowance should be adjusted to reflect the higher consumption needs associated with the unit until the situation is remedied. The resident should be granted individual relief until the allowance is adjusted.

The excessive consumption is due to special needs of the family that are beyond their control, such as the need for specialized equipment in the case of a family member who is ill, elderly, or who has a disability.

In determining the amount of the reasonable accommodation or individual relief, the PHA will allow a reasonable measure of additional usage as necessary. To arrive at the amount of additional utility cost of specific equipment, the family may provide information from the manufacturer of the equipment, or the family or PHA may conduct an internet search for an estimate of usage or additional monthly cost.

Information on reasonable accommodation and individual relief for charges in excess of the utility allowance will be provided to all families at admission as part of the information on payment standards and utility allowances in the briefing packet. The PHA will also provide information on utility relief programs or medical discounts (sometimes referred to as “Medical Baseline discounts”) that may be available through local utility providers.

At its discretion, the PHA may reevaluate the need for the increased utility allowance at any regular reexamination.

If the excessive consumption is caused by a characteristic of the unit or PHA-supplied equipment that is beyond the family’s control, such as a particularly inefficient refrigerator or inadequate insulation, the individual relief to the resident will cease when the situation is remedied.

Utility Allowance Revisions
At reexamination, the PHA must use the current utility allowance schedule [HCV GB, p. 18-8].

PHA Policy
Revised utility allowances will be applied to a family’s rent and subsidy calculations at the first annual reexamination that is effective after the allowance is adopted.

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Unlimited copies may be made for internal use. Page 6A-53 6A-III.E. PRORATED ASSISTANCE FOR MIXED FAMILIES [24 CFR 5.520] HUD regulations prohibit assistance to ineligible family members. A mixed family is one that includes at least one U.S. citizen or eligible immigrant and any number of ineligible family members. The PHA must prorate the assistance provided to a mixed family. The PHA will first determine assistance as if all family members were eligible and then prorate the assistance based upon the percentage of family members that actually are eligible. For example, if the PHA subsidy for a family is calculated at $500 and two of four family members are ineligible, the PHA subsidy would be reduced to $250.

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Unlimited copies may be made for internal use. Page 6A-54 EXHIBIT 6A-1: ANNUAL INCOME INCLUSIONS
24 CFR 5.609
(a) Annual income means all amounts,
monetary or not, which:
(1) Go to, or on behalf of, the family head or
spouse (even if temporarily absent) or to any
other family member; or
(2) Are anticipated to be received from a
source outside the family during the 12-
month period following admission or annual
reexamination effective date; and
(3) Which are not specifically excluded in
paragraph (c) of this section.
(4) Annual income also means amounts
derived (during the 12-month period) from
assets to which any member of the family has
access.
(b) Annual income includes, but is not limited
to:
(1) The full amount, before any payroll
deductions, of wages and salaries, overtime
pay, commissions, fees, tips and bonuses, and
other compensation for personal services;
(2) The net income from the operation of a
business or profession. Expenditures for
business expansion or amortization of capital
indebtedness shall not be used as deductions
in determining net income. An allowance for
depreciation of assets used in a business or
profession may be deducted, based on
straight line depreciation, as provided in
Internal Revenue Service regulations. Any
withdrawal of cash or assets from the
operation of a business or profession will be
included in income, except to the extent the
withdrawal is reimbursement of cash or assets
invested in the operation by the family;
(3) Interest, dividends, and other net income
of any kind from real or personal property.

Expenditures for amortization of capital
indebtedness shall not be used as deductions
in determining net income. An allowance for
depreciation is permitted only as authorized
in paragraph (b)(2) of this section. Any
withdrawal of cash or assets from an
investment will be included in income, except
to the extent the withdrawal is
reimbursement of cash or assets invested by
the family. Where the family has net family
assets in excess of $5,000, annual income
shall include the greater of the actual income
derived from all net family assets or a
percentage of the value of such assets based
on the current passbook savings rate, as
determined by HUD;
(4) The full amount of periodic amounts
received from Social Security, annuities,
insurance policies, retirement funds,
pensions, disability or death benefits, and
other similar types of periodic receipts,
including a lump-sum amount or prospective
monthly amounts for the delayed start of a
periodic amount (except as provided in
paragraph (c)(14) of this section);
(5) Payments in lieu of earnings, such as
unemployment and disability compensation,
worker's compensation and severance pay
(except as provided in paragraph (c)(3) of this
section);

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Unlimited copies may be made for internal use. Page 6A-55 (6) Welfare assistance payments.
(i) Welfare assistance payments made under
the Temporary Assistance for Needy Families
(TANF) program are included in annual
income only to the extent such payments:
(A) Qualify as assistance under the TANF
program definition at 45 CFR 260.311; and
(B) Are not otherwise excluded under
paragraph (c) of this section.
(ii) If the welfare assistance payment includes
an amount specifically designated for shelter
and utilities that is subject to adjustment by
the welfare assistance agency in accordance
with the actual cost of shelter and utilities,
the amount of welfare assistance income to
be included as income shall consist of:
(A) The amount of the allowance or grant
exclusive of the amount specifically
designated for shelter or utilities; plus
(B) The maximum amount that the welfare
assistance agency could in fact allow the
family for shelter and utilities. If the family's
welfare assistance is ratably reduced from the
standard of need by applying a percentage,
the amount calculated under this paragraph
shall be the amount resulting from one
application of the percentage.
(7) Periodic and determinable allowances,
such as alimony and child support payments,
and regular contributions or gifts received
from organizations or from persons not
residing in the dwelling;
(8) All regular pay, special pay and allowances
of a member of the Armed Forces (except as
provided in paragraph (c)(7) of this section)
1 Text of 45 CFR 260.31 follows.
(9) For section 8 programs only and as
provided in 24 CFR 5.612, any financial
assistance, in excess of amounts received for
tuition, that an individual receives under the
Higher Education Act of 1965 (20 U.S.C. 1001
et seq.), from private sources, or from an
institution of higher education (as defined
under the Higher Education Act of 1965 (20
U.S.C. 1002)), shall be considered income to
that individual, except that financial
assistance described in this paragraph is not
considered annual income for persons over
the age of 23 with dependent children. For
purposes of this paragraph, “financial
assistance” does not include loan proceeds for
the purpose of determining income.

HHS DEFINITION OF "ASSISTANCE"
45 CFR: GENERAL TEMPORARY ASSISTANCE FOR

NEEDY FAMILIES
260.31 What does the term “assistance”
mean?
(a)(1) The term “assistance” includes cash,
payments, vouchers, and other forms of
benefits designed to meet a family’s
ongoing basic needs (i.e., for food, clothing,
shelter, utilities, household goods, personal
care items, and general incidental
expenses).
(2) It includes such benefits even when
they are:
(i) Provided in the form of payments by a
TANF agency, or other agency on its behalf,
to individual recipients; and
(ii) Conditioned on participation in work
experience or community service (or any
other work activity under 261.30 of this
chapter).

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Unlimited copies may be made for internal use. Page 6A-56 (3) Except where excluded under
paragraph (b) of this section, it also
includes supportive services such as
transportation and childcare provided to
families who are not employed.
(b) [The definition of “assistance”]
excludes: (1) Nonrecurrent, short-term
benefits that:
(i) Are designed to deal with a specific crisis
situation or episode of need;
(ii) Are not intended to meet recurrent or
ongoing needs; and
(iii) Will not extend beyond four months.
(2) Work subsidies (i.e., payments to
employers or third parties to help cover the
costs of employee wages, benefits,
supervision, and training);
(3) Supportive services such as childcare
and transportation provided to families
who are employed;
(4) Refundable earned income tax credits;
(5) Contributions to, and distributions
from, Individual Development Accounts;
(6) Services such as counseling, case
management, peer support, childcare
information and referral, transitional
services, job retention, job advancement,
and other employment-related services
that do not provide basic income support;
and
(7) Transportation benefits provided under
a Job Access or Reverse Commute project,
pursuant to section 404(k) of [the Social
Security] Act, to an individual who is not
otherwise receiving assistance.

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Unlimited copies may be made for internal use. Page 6A-57 EXHIBIT 6A-2: ANNUAL INCOME EXCLUSIONS
24 CFR 5.609
(c) Annual income does not include the
following:
(1) Income from employment of children
(including foster children) under the age of 18
years;
(2) Payments received for the care of foster
children or foster adults (usually persons with
disabilities, unrelated to the tenant family,
who are unable to live alone);
(3) Lump-sum additions to family assets, such
as inheritances, insurance payments
(including payments under health and
accident insurance and worker's
compensation), capital gains and settlement
for personal or property losses (except as
provided in paragraph (b)(5) of this section);
(4) Amounts received by the family that are
specifically for, or in reimbursement of, the
cost of medical expenses for any family
member;
(5) Income of a live-in aide, as defined in
Sec. 5.403;
(6) Subject to paragraph (b)(9) of this section,
the full amount of student financial assistance
paid directly to the student or to the
educational institution;
(7) The special pay to a family member serving
in the Armed Forces who is exposed to hostile
fire;
(8) (i) Amounts received under training
programs funded by HUD;
(ii) Amounts received by a person with a
disability that are disregarded for a limited
time for purposes of Supplemental Security
Income eligibility and benefits because they
are set aside for use under a Plan to Attain
Self-Sufficiency (PASS);

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Unlimited copies may be made for internal use. Page 6A-58 (iii) Amounts received by a participant in
other publicly assisted programs which are
specifically for or in reimbursement of out-ofpocket expenses incurred (special equipment, clothing, transportation, childcare, etc.) and
which are made solely to allow participation
in a specific program;
(iv) Amounts received under a resident service
stipend. A resident service stipend is a modest
amount (not to exceed $200 per month)
received by a resident for performing a
service for the PHA or owner, on a part-time
basis, that enhances the quality of life in the
development. Such services may include, but
are not limited to, fire patrol, hall monitoring,
lawn maintenance, resident initiatives
coordination, and serving as a member of the
PHA's governing board. No resident may
receive more than one such stipend during
the same period of time;
(v) Incremental earnings and benefits
resulting to any family member from
participation in qualifying State or local
employment training programs (including
training programs not affiliated with a local
government) and training of a family member
as resident management staff. Amounts
excluded by this provision must be received
under employment training programs with
clearly defined goals and objectives, and are
excluded only for the period during which the
family member participates in the
employment training program;
(9) Temporary, nonrecurring or sporadic
income (including gifts);
(10) Reparation payments paid by a foreign
government pursuant to claims filed under
the laws of that government by persons who
were persecuted during the Nazi era;
(11) Earnings in excess of $480 for each fulltime student 18 years old or older (excluding the head of household and spouse);
(12) Adoption assistance payments in excess
of $480 per adopted child;
(13) [Reserved]
(14) Deferred periodic amounts from
supplemental security income and social
security benefits that are received in a lump
sum amount or in prospective monthly
amounts, or any deferred Department of
Veterans Affairs disability benefits that are
received in a lump sum amount or prospective
monthly amounts.
(15) Amounts received by the family in the
form of refunds or rebates under State or
local law for property taxes paid on the
dwelling unit;

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Unlimited copies may be made for internal use. Page 6A-59 (16) Amounts paid by a State agency to a
family with a member who has a
developmental disability and is living at home
to offset the cost of services and equipment
needed to keep the developmentally disabled
family member at home; or
(17) Amounts specifically excluded by any
other Federal statute from consideration as
income for purposes of determining eligibility
or benefits under a category of assistance
programs that includes assistance under any
program to which the exclusions set forth in
24 CFR 5.609(c) apply. A notice will be
published in the Federal Register and
distributed to PHAs and housing owners
identifying the benefits that qualify for this
exclusion. Updates will be published and
distributed when necessary. [See Section
6-I.M. for a list of benefits that qualify for
this exclusion.]

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Unlimited copies may be made for internal use. Page 6A-60 EXHIBIT 6A-3: TREATMENT OF FAMILY ASSETS
24 CFR 5.603(b) Net Family Assets
(1) Net cash value after deducting reasonable
costs that would be incurred in disposing of
real property, savings, stocks, bonds, and
other forms of capital investment, excluding
interests in Indian trust land and excluding
equity accounts in HUD homeownership
programs. The value of necessary items of
personal property such as furniture and
automobiles shall be excluded.
(2) In cases where a trust fund has been
established and the trust is not revocable by,
or under the control of, any member of the
family or household, the value of the trust
fund will not be considered an asset so long as
the fund continues to be held in trust. Any
income distributed from the trust fund shall
be counted when determining annual income
under Sec. 5.609.
(3) In determining net family assets, PHAs or
owners, as applicable, shall include the value
of any business or family assets disposed of by
an applicant or tenant for less than fair
market value (including a disposition in trust,
but not in a foreclosure or bankruptcy sale)
during the two years preceding the date of
application for the program or reexamination,
as applicable, in excess of the consideration
received therefor. In the case of a disposition
as part of a separation or divorce settlement,
the disposition will not be considered to be
for less than fair market value if the applicant
or tenant receives important consideration
not measurable in dollar terms.
(4) For purposes of determining annual
income under Sec. 5.609, the term "net family
assets'' does not include the value of a home
currently being purchased with assistance
under part 982, subpart M of this title. This
exclusion is limited to the first 10 years after
the purchase date of the home.

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Unlimited copies may be made for internal use. Page 6A-61 EXHIBIT 6A-4: THE EFFECT OF WELFARE BENEFIT REDUCTION
24 CFR 5.615
Public housing program and Section 8 tenant-based assistance program: How welfare benefit reduction affects family income.
(a) Applicability. This section applies to
covered families who reside in public housing
(part 960 of this title) or receive Section 8
tenant-based assistance (part 982 of this
title).
(b) Definitions. The following definitions apply
for purposes of this section:

Covered families. Families who receive
welfare assistance or other public assistance
benefits ("welfare benefits'') from a State or
other public agency ("welfare agency'') under
a program for which Federal, State, or local
law requires that a member of the family
must participate in an economic selfsufficiency program as a condition for such assistance.

Economic self-sufficiency program. See
definition at Sec. 5.603.

Imputed welfare income. The amount of
annual income not actually received by a
family, as a result of a specified welfare
benefit reduction, that is nonetheless
included in the family's annual income for
purposes of determining rent.

Specified welfare benefit reduction.
(1) A reduction of welfare benefits by the
welfare agency, in whole or in part, for a
family member, as determined by the welfare
agency, because of fraud by a family member
in connection with the welfare program; or
because of welfare agency sanction against a
family member for noncompliance with a
welfare agency requirement to participate in
an economic self-sufficiency program.
(2) "Specified welfare benefit reduction'' does
not include a reduction or termination of
welfare benefits by the welfare agency:
(i) at expiration of a lifetime or other time
limit on the payment of welfare benefits;
(ii) because a family member is not able to
obtain employment, even though the family
member has complied with welfare agency
economic self-sufficiency or work activities
requirements; or
(iii) because a family member has not
complied with other welfare agency
requirements.
(c) Imputed welfare income.
(1) A family's annual income includes the
amount of imputed welfare income (because
of a specified welfare benefits reduction, as
specified in notice to the PHA by the welfare
agency), plus the total amount of other
annual income as determined in accordance
with Sec. 5.609.
(2) At the request of the PHA, the welfare
agency will inform the PHA in writing of the
amount and term of any specified welfare
benefit reduction for a family member, and
the reason for such reduction, and will also
inform the PHA of any subsequent changes in
the term or amount of such specified welfare
benefit reduction. The PHA will use this
information to determine the amount of
imputed welfare income for a family.
(3) A family's annual income includes imputed
welfare income in family annual income, as
determined at the PHA's interim or regular
reexamination of family income and

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Unlimited copies may be made for internal use. Page 6A-62 composition, during the term of the welfare
benefits reduction (as specified in information
provided to the PHA by the welfare agency).
(4) The amount of the imputed welfare
income is offset by the amount of additional
income a family receives that commences
after the time the sanction was imposed.

When such additional income from other
sources is at least equal to the imputed
(5) The PHA may not include imputed welfare
income in annual income if the family was not
an assisted resident at the time of sanction.
(d) Review of PHA decision.
(1) Public housing. If a public housing tenant
claims that the PHA has not correctly
calculated the amount of imputed welfare
income in accordance with HUD
requirements, and if the PHA denies the
family's request to modify such amount, the
PHA shall give the tenant written notice of
such denial, with a brief explanation of the
basis for the PHA determination of the
amount of imputed welfare income. The PHA
notice shall also state that if the tenant does
not agree with the PHA determination, the
tenant may request a grievance hearing in
accordance with part 966, subpart B of this
title to review the PHA determination. The
tenant is not required to pay an escrow
deposit pursuant to Sec. 966.55(e) for the
portion of tenant rent attributable to the
imputed welfare income in order to obtain a
grievance hearing on the PHA determination.
(2) Section 8 participant. A participant in the
Section 8 tenant-based assistance program
may request an informal hearing, in
accordance with Sec. 982.555 of this title, to
review the PHA determination of the amount
of imputed welfare income that must be
included in the family's annual income in
accordance with this section. If the family
claims that such amount is not correctly
calculated in accordance with HUD
requirements, and if the PHA denies the
family's request to modify such amount, the
PHA shall give the family written notice of
such denial, with a brief explanation of the
basis for the PHA determination of the
amount of imputed welfare income. Such
notice shall also state that if the family does
not agree with the PHA determination, the
family may request an informal hearing on the
determination under the PHA hearing
procedure.
(e) PHA relation with welfare agency.
(1) The PHA must ask welfare agencies to
inform the PHA of any specified welfare
benefits reduction for a family member, the
reason for such reduction, the term of any
such reduction, and any subsequent welfare
agency determination affecting the amount or
term of a specified welfare benefits reduction.

If the welfare agency determines a specified
welfare benefits reduction for a family
member, and gives the PHA written notice of
such reduction, the family's annual incomes
shall include the imputed welfare income
because of the specified welfare benefits
reduction.
(2) The PHA is responsible for determining
the amount of imputed welfare income that is
included in the family's annual income as a
result of a specified welfare benefits
reduction as determined by the welfare
agency, and specified in the notice by the
welfare agency to the PHA. However, the PHA
is not responsible for determining whether a
reduction of welfare benefits by the welfare
agency was correctly determined by the
welfare agency in accordance with welfare
program requirements and procedures, nor
for providing the opportunity for review or

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A-63
hearing on such welfare agency
determinations.
(3) Such welfare agency determinations are
the responsibility of the welfare agency, and
the family may seek appeal of such
determinations through the welfare agency's
normal due process procedures. The PHA shall
be entitled to rely on the welfare agency
notice to the PHA of the welfare agency's
determination of a specified welfare benefits
reduction.

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Unlimited copies may be made for internal use. Page 6B-1 Chapter 6.B.

INCOME AND SUBSIDY DETERMINATIONS UNDER HOTMA 102/104
[24 CFR Part 5, Subparts E and F; 24 CFR 982]

INTRODUCTION
This chapter is applicable upon the PHA’s HOTMA 102/104 compliance date. Prior to this date, the PHA will follow policies as outlined in Chapter 6.A. of the model policy.

A family’s income determines eligibility for assistance and is also used to calculate the family’s payment and the PHA’s subsidy. The PHA will use the policies and methods described in this chapter to ensure that only eligible families receive assistance and that no family pays more or less than its obligation under the regulations. This chapter describes HUD regulations and PHA policies related to these topics in three parts as follows:

Part I: Annual Income. HUD regulations specify the sources of income which are excluded from the family’s annual income. These requirements and PHA policies for calculating annual income are found in Part I.

Part II: Assets. HUD regulations specify the types of assets which are excluded from a family’s annual income. These requirements and PHA policies for calculating income from assets are found in Part II.

Part III: Adjusted Income. Once annual income has been established, HUD regulations require the PHA to subtract from annual income any of five mandatory deductions for which a family qualifies and allow the PHA to adopt additional permissive deductions.

These requirements and PHA policies for calculating adjusted income are found in Part III.

Part IV: Calculating Family Share and PHA Subsidy. This part describes the statutory formula for calculating total tenant payment (TTP), the use of utility allowances, and the methodology for determining PHA subsidy and required family payment.

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Unlimited copies may be made for internal use. Page 6B-2 PART I: ANNUAL INCOME
6B-I.A. OVERVIEW [24 CFR 5.609]
Annual income includes:
x All amounts, not specifically excluded in 24 CFR 5.609(b); x All amounts received from all sources other than those specifically excluded in 24 CFR

5.609(b)) by each member of the family who is 18 years of age or older or is the head of household or spouse;
x Unearned income by or on behalf of each dependent who is under 18 years of age; and x Imputed returns of an asset based on the current passbook savings rate, as determined by HUD, when the value of net family assets exceeds the HUD-published threshold amount adjusted annually and published in HUD’s Inflation-Adjusted Values tables) $50,000 (which amount HUD will adjust annually) and the actual returns from a given asset cannot be calculated.

In addition to this general definition, the regulations at 24 CFR 5.609(b) provide a comprehensive listing of all sources of income that are excluded from annual income. Note, unlike in previous versions of the regulations, the current regulations governing annual income do not list sources of income that are to be included. Instead, HUD relies on the definition of excluded income under 24 CFR 5.609(b) to provide the scope of what is included. To that end, generally, all income is included unless it is specifically excluded by regulation.

Annual income includes “all amounts received,” not the amount that a family may be legally entitled to receive but did not receive. For example, a family’s child support or alimony income must be based on payments received, not the amounts to which the family is entitled by court or agency orders. However, when a family member’s wages or benefits are garnished, levied, or withheld to pay restitution, child support, tax debt, student loan debt, or other applicable debts, the PHA must use the gross amount of the income, prior to the reduction, to determine a family’s annual income [Notice PIH 2023-27].

Annual income also includes all actual anticipated income from assets (provided the income is not otherwise excluded) even if the asset itself is excluded from net family assets [Notice PIH 2023-27]. 24 CFR 5.603(b)(1) describes HUD regulations for treating specific types of income and assets. The full texts of those portions of the regulations are provided in exhibits at the end of this chapter as follows:
x Annual Income Full Definition (Exhibit 6-1)
x Treatment of Family Assets (Exhibit 6-2)
x The Effect of Welfare Benefit Reduction (Exhibit 6-3) Sections 6-I.B and 6-I.C discuss general requirements and methods for calculating annual income. The rest of this section describes how each source of income is treated for the

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Unlimited copies may be made for internal use. Page 6B-3 purposes of determining annual income. Verification requirements for annual income are discussed in Chapter 7.

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Unlimited copies may be made for internal use. Page 6B-4 6B-I.B. HOUSEHOLD COMPOSITION AND INCOME
Overview
Income received by all family members must be counted unless specifically excluded by the regulations. It is the responsibility of the head of household to report changes in family composition in accordance with HUD regulations and PHA policies in Chapter 11. The rules on which sources of income are counted vary somewhat by family member. The chart below summarizes how family composition affects income determinations.

Summary of Income Included and Excluded by Person
Live-in aides Income from all sources (both earned and unearned) is excluded [24 CFR 5.609(b)(8)].

Foster child or foster adult Income from all sources (both earned and unearned) is excluded [24 CFR 5.609(b)(8)].

Head, spouse, or cohead
Other adult family members
All sources of income not specifically excluded by the
regulations are included [24 CFR 5.609(a)].

Minors Earned income of children under 18 years of age is excluded [24 CFR 5.609(b)(3)].

All sources of unearned income, except those specifically excluded by the regulations, are included [24 CFR

5.609(a)].

Full-time students 18 years of
age or older (not head,
spouse, or cohead)
Earned income in excess of the dependent deduction is
excluded [24 CFR 5.609(b)(14)].

All sources of unearned income, except those specifically excluded by the regulations, are included.

Temporarily Absent Family Members
The current regulations governing annual income do not specifically address temporarily absent family members. The regulations also do not define “temporarily” or “permanently” absent or specify a timeframe associated with a temporary versus a permanent absence.

PHA Policy
Generally, an individual who is or is expected to be absent from the assisted unit for 90 consecutive days or less is considered temporarily absent and continues to be considered a family member. An individual who is or is expected to be absent from the assisted unit for more than 90 consecutive days is considered permanently absent and no longer a family member. Exceptions to this general policy are discussed below.

It is the responsibility of the head of household to report changes in family composition.

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PHA Policy
When someone who has been considered a family member attends school away from home and resides with the family during school recess, the person will not be considered a family member as long as the person’s stay meets the policy regarding guests as set forth in Chapter 3-I.J.

Absences Due to Placement in Foster Care
Children temporarily absent from the home as a result of placement in foster care (as confirmed by the state child welfare agency) are considered members of the family [24 CFR

5.403].

PHA Policy
If a child has been placed in foster care, the head of household will notify the PHA in writing and provide written verification from the appropriate agency whether and when the child is expected to return to the home. If the agency confirms that the child has been permanently removed from the home, the child will not be counted as a family member.

Absent Head, Spouse, or Cohead
PHA Policy
An employed head, spouse, or cohead absent from the unit more than 90 consecutive days due to employment will not continue to be considered a family member, with the exception of military personnel as required by the Service Members Civil Relief Act (SCRA) [50 U.S.C. § 101 et seq. SCRA § 508 (b)].

Family Members Permanently Confined for Medical Reasons If a family member is confined to a nursing home or hospital on a permanent basis, that person is no longer considered a family member and the income of that person is not counted [HCV GB, p. 5-22].

PHA Policy
The PHA will request verification from a responsible medical professional and will use this determination. If the verification indicates that the family member will be permanently confined to a nursing home, the family member will be considered permanently absent. If the responsible medical professional cannot provide a determination, the person generally will be considered temporarily absent. At the family’s request, this may be re-evaluated after 3 months. The family may present evidence that the family member is confined on a permanent basis and request that the person not be considered a family member.

When an individual who has been counted as a family member is determined permanently absent, the family is eligible for the medical expense deduction only if the

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Unlimited copies may be made for internal use. Page 6B-6 remaining head, spouse, or cohead qualifies as an elderly person or a person with disabilities.

Joint Custody of Dependents
PHA Policy
Dependents that are subject to a joint custody arrangement will be considered a member of the family, if they live with the applicant or participant family 50 percent or more of the time.

When more than one applicant or participant family is claiming the same dependents as family members, the family with primary custody at the time of the initial examination or reexamination will be able to claim the dependents and receive the dependent allowance/deduction. If there is a dispute about which family should claim them, the PHA will make the determination based on available documents such as court orders, school records, or an IRS return showing which family has claimed the child for income tax purposes, or school/childcare records.

Caretakers for a Child
PHA Policy
The approval of a caretaker is at the owner and PHA’s discretion and subject to the owner and PHA’s screening criteria. If neither a parent nor a designated guardian remains in a household receiving HCV assistance, the PHA will take the following actions.
(1) If a responsible agency has determined that another adult is to be brought into the assisted unit to care for a child for an indefinite period, the designated caretaker will not be considered a family member until a determination of custody or legal guardianship is made.
(2) If a caretaker has assumed responsibility for a child without the involvement of a responsible agency or formal assignment of custody or legal guardianship, the caretaker will be treated as a visitor for 90 days. After the 90 days has elapsed, the caretaker will be considered a family member unless information is provided that would confirm that the caretaker’s role is temporary. In such cases the PHA will extend the caretaker’s status as an eligible visitor.
(3) At any time that custody or guardianship legally has been awarded to a caretaker, the housing choice voucher will be transferred to the caretaker. (4) During any period that a caretaker is considered a visitor, the income of the caretaker is not counted in annual income and the caretaker does not qualify the family for any deductions from income.

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Unlimited copies may be made for internal use. Page 6B-7 6B-I.C. CALCULATING ANNUAL INCOME
The methodology used for calculating income differs depending on whether income is being calculated at initial occupancy, interim reexamination, or at annual reexamination. However, income from assets is always anticipated regardless of certification type.

Anticipating Annual Income [24 CFR 5.609(c)(1)]
At initial occupancy and for an interim reexamination of family income, the PHA is required to use anticipated income (current income) for the upcoming 12-month period following the new admission or interim reexamination effective date. Policies related to verifying income are found in Chapter 7.

PHA Policy
When the PHA cannot readily anticipate income based upon current circumstances (e.g., in the case of temporary, sporadic, or variable employment, seasonal employment, unstable working hours, or suspected fraud), the PHA will review and analyze historical data for patterns of employment, paid benefits, and receipt of other income and use the results of this analysis to establish annual income.

Any time current circumstances are not used to project annual income, a clear rationale for the decision will be documented in the file. In all such cases the family may present information and documentation to the PHA to show why the historic pattern does not represent the family’s anticipated income.

In all cases, the family file will be documented with a clear record of the reason for the decision, and a clear audit trail will be left as to how the PHA annualized projected income.

Known Changes in Income
If the PHA verifies an upcoming increase or decrease in income at admission or interim reexamination, annual income will be projected by applying each income amount to the appropriate part of the 12-month period.

Example: An employer reports that a full-time employee who has been receiving $18/hour will begin to receive $18.25/hour in the eighth week after the effective date of the new admission or interim reexamination. In such a case the PHA would calculate annual income as follows: ($18/hour × 40 hours × 7 weeks) + ($18.25 × 40 hours × 45 weeks).

The family may present information that demonstrates that implementing a change before its effective date would create a hardship for the family. In such cases the PHA will calculate annual income using current circumstances and then conduct an interim reexamination in accordance with PHA policy in Chapter 11.

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Unlimited copies may be made for internal use. Page 6B-8 Calculating Annual Income at Annual Reexamination [24 CFR.609(c)(2); Notice PIH 2023-27] At annual reexamination, except where the PHA uses a streamlined income determination, PHAs must first determine the family’s income for the previous 12-month period and use this amount as the family income for annual reexaminations; however, adjustments to reflect current income must be made. Any change of income since the family’s last annual reexamination, including those that did not meet the threshold to process an interim reexamination of family income in accordance with PHA policies in Chapter 11 and HUD regulations, must be considered. If, however, there have been no changes to income, then the amount of income calculated for the previous 12-month period is the amount that will be used to determine the family’s rental assistance. Income from assets is always anticipated, irrespective of the income examination type. Policies related to conducting annual reexaminations are located in Chapter 11.
6B-I.D. EARNED INCOME
Wages and Related Compensation [24 CFR 5.609(a); Notice PIH 2023-27] The earned income of each member of the family who is 18 years of age or older, or who is the head of household or spouse/cohead regardless of age, is included in annual income. Income received as a day laborer or seasonal worker is also included in annual income, even if the source, date, or amount of the income varies [24 CFR 5.609 (b)(24)].

Earned income means income or earnings from wages, tips, salaries, other employee compensation, and net income from self-employment. Earned income does not include any pension or annuity, transfer payments (meaning payments made or income received in which no goods or services are being paid for, such as welfare, social security, and governmental subsidies for certain benefits), or any cash or in-kind benefits [24 CFR 5.100].

A day laborer is defined as an individual hired and paid one day at a time without an agreement that the individual will be hired or work again in the future [24 CFR 5.603(b)]. Income earned as a day laborer is not considered nonrecurring income.

A seasonal worker is defined as an individual who is hired into a short-term position ( e.g., for which the customary employment period for the position is six months or fewer) and the employment begins about the same time each year (such as summer or winter). Typically, the individual is hired to address seasonal demands that arise for the particular employer or industry [24 CFR 5.603(b)]. Some examples of seasonal work include employment limited to holidays or agricultural seasons. Seasonal work may include but is not limited to employment as a lifeguard, ballpark vendor, or snowplow driver [Notice PIH 2023-27].

PHA Policy
For persons who regularly receive bonuses or commissions, the PHA will verify and then average amounts received for the two years preceding admission or reexamination. If only a one-year history is available, the PHA will use the prior year amounts. In either case the family may provide, and the PHA will consider, a credible justification for not using this history to anticipate future bonuses or commissions. If a new employee has

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Unlimited copies may be made for internal use. Page 6B-9 not yet received any bonuses or commissions, the PHA will count only the amount estimated by the employer. The file will be documented appropriately.

Military Pay
All regular pay, special pay and allowances of a member of the Armed Forces are counted except for the special pay to a family member serving in the Armed Forces who is exposed to hostile fire [24 CFR 5.609(b)(11)].

Earnings of a Minor [24 CFR 5.609(b)(3)]
A minor is a member of the family, other than the head of household or spouse, who is under 18 years of age. Employment income earned by minors is not included in annual income. All other sources of unearned income, except those specifically excluded by the regulations, are included.

Earned Income of Full-Time Students [24 CFR 5.609(b)(14)] The earned income of a dependent full-time student in excess of the amount of the dependent deduction is excluded from annual income. All sources of unearned income, except those specifically excluded by the regulations, are included.

A family member other than the head of household or spouse/cohead is considered a full-time student if they are attending school or vocational training on a full-time basis [24 CFR 5.603(b)].

To be considered “full-time,” a student must be considered “full-time” by an educational institution with a degree or certificate program [HCV GB, p. 5-29].

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Unlimited copies may be made for internal use. Page 6B-10 6B-I.E. EARNED INCOME DISALLOWANCE FOR PERSONS WITH DISABILITIES [24 CFR 5.617; STREAMLINING FINAL RULE (SFR) FEDERAL REGISTER 3/8/16; NOTICE PIH 2023-27] HOTMA removed the statutory authority for the EID. The EID is available only to families that are eligible for and participating on the program as of December 31, 2023, or before; no new families may be added on or after January 1, 2024. If a family is receiving the EID prior to or on the effective date of December 31, 2023, they are entitled to the full amount of the benefit for a full 24-month period. The policies below are applicable only to such families. No family will still be receiving the EID after December 31, 2025. The EID will sunset on January 1, 2026, and the PHA policies below will no longer be applicable as of that date or when the last qualifying family exhausts their exclusion period, whichever is sooner.

Calculation of the Disallowance
Calculation of the earned income disallowance for an eligible member of a qualified family begins with a comparison of the member’s current income with their “baseline income.” The family member’s baseline income is their income immediately prior to qualifying for the EID.

The family member’s baseline income remains constant throughout the period that they are participating in the EID.

Calculation Method
Initial 12-Month Exclusion
During the initial exclusion period of 12 consecutive months, the full amount (100 percent) of any increase in income attributable to new employment or increased earnings is excluded.

PHA Policy
The initial EID exclusion period will begin on the first of the month following the date an eligible member of a qualified family is first employed or first experiences an increase in earnings.

Second 12-Month Exclusion
During the second exclusion period of 12 consecutive months, the PHA must exclude at least 50 percent of any increase in income attributable to employment or increased earnings.

PHA Policy
During the second 12-month exclusion period, the PHA will exclude 100 percent of any increase in income attributable to new employment or increased earnings.

Lifetime Limitation
The EID has a two-year (24-month) lifetime maximum. The two-year eligibility period begins at the same time that the initial exclusion period begins and ends 24 months later. During the 24- month period, an individual remains eligible for EID even if they begin to receive assistance from a different housing agency, move between public housing and Section 8 assistance, or have breaks in assistance. The EID will sunset on January 1, 2026. In no circumstances will a family member’s exclusion period continue past January 1, 2026.

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Unlimited copies may be made for internal use. Page 6B-11 6B-I.F. BUSINESS AND SELF-EMPLOYMENT INCOME [24 CFR 5.609(B)(28); NOTICE PIH 2023-27] Annual income includes “net income from the operation of a business or profession”. Net income is gross income minus business expenses that allows the business to operate. Gross income is all income amounts received into the business, prior to the deduction of business expenses.

Expenditures for business expansion or amortization of capital indebtedness may not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.” PHA Policy
To determine business expenses that may be deducted from gross income, the PHA will use current applicable Internal Revenue Service (IRS) rules for determining allowable business expenses [see IRS Publication 535], unless a topic is addressed by HUD regulations or guidance as described below.

Independent Contractors
Income received as an independent contractor is included in annual income, even if the source, date, or amount of the income varies [24 CFR 5.609 (b)(24)].

An independent contractor is defined as an individual who qualifies as an independent contractor instead of an employee in accordance with the Internal Revenue Code Federal income tax requirements and whose earnings are consequently subject to the Self-Employment Tax. In general, an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done [24 CFR

5.603(b)]. This may include individuals such as third-party delivery and transportation service providers and “gig workers” like babysitters, landscapers, rideshare drivers, and house cleaners.

Income earned as an independent contractor is not considered nonrecurring income.

Business Expansion
HUD regulations do not permit the PHA to deduct from gross income expenses for business expansion.

PHA Policy
Business expansion is defined as any capital expenditures made to add new business activities, to expand current facilities, or to operate the business in additional locations.

For example, purchase of a street sweeper by a construction business for the purpose of adding street cleaning to the services offered by the business would be considered a business expansion. Similarly, the purchase of a property by a hair care business to open at a second location would be considered a business expansion.

Capital Indebtedness

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Unlimited copies may be made for internal use. Page 6B-12 HUD regulations do not permit the PHA to deduct from gross income the amortization of capital indebtedness.

PHA Policy
Capital indebtedness is defined as the principal portion of the payment on a capital asset such as land, buildings, and machinery. This means the PHA will allow as a business expense interest, but not principal, paid on capital indebtedness.

Negative Business Income
If the net income from a business is negative, no business income will be included in annual income; a negative amount will not be used to offset other family income.

Withdrawal of Cash or Assets from a Business
HUD regulations require the PHA to include in annual income the withdrawal of cash or assets from the operation of a business or profession unless the withdrawal reimburses a family member for cash or assets invested in the business by the family.

PHA Policy
Acceptable investments in a business include cash loans and contributions of assets or equipment. For example, if a member of an assisted family provided an up-front loan of $2,000 to help a business get started, the PHA will not count as income any withdrawals from the business up to the amount of this loan until the loan has been repaid.

Investments do not include the value of labor contributed to the business without compensation.

Co-owned Businesses
PHA Policy
If a business is co-owned with someone outside the family, the family must document the share of the business it owns. If the family’s share of the income is lower than its share of ownership, the family must document the reasons for the difference.

Assets Owned by a Business Entity
If a business entity (e.g., limited liability company or limited partnership) owns the asset, then the family’s asset is their ownership stake in the business, not some portion of the business’s assets. However, if the family holds the assets in their own name (e.g., they own one-third of a restaurant) rather than in the name of a business entity, then the percentage value of the asset owned by the family is what is counted toward net family assets (e.g., one-third of the value of the restaurant) [Notice PIH 2023-27].

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Unlimited copies may be made for internal use. Page 6B-13 6B-I.G. STUDENT FINANCIAL ASSISTANCE [FR NOTICE 2/14/23 AND NOTICE PIH 2023-27] Introduction
Section 479B of the HEA requires that all assistance under Title IV of the HEA and Bureau of Indian Affairs student financial assistance, even assistance provided to students in excess of tuition and required fees or charges, be excluded from HUD income calculations.

For Section 8 programs only, however, for over 10 years through FY 2022, HUD appropriations have included a provision that for certain students receiving Section 8 assistance, any amounts received in excess of tuition and any other required fees and charges are considered income (with the exception of students who lived with their parents or who were over the age of 23 with a dependent child).

While the language in various consolidated appropriations acts is limited to federal fiscal year covered by the act, this does not rule out the possibility that similar language will be included in future years’ appropriations bills.
x For any funds from a year where HUD’s appropriations acts include this limitation, it will apply with respect to Section 8 participants. The PHA will follow the pre-HOTMA Section 8 student financial assistance limitation described below. x During years in which an appropriations act does not contain this Section 8 student financial assistance limitation (or any other such limitation), then the determination of student financial assistance as included/excluded income for all Section 8 students defaults to the methodology described for the public housing program and listed below.

Pre-HOTMA Section 8 Student Financial Assistance Limitation [FR 4/10/06; Notice PIH 2015- 21]
In 2005, Congress passed a law (for Section 8 programs only) requiring that certain student financial assistance be included in annual income. Prior to that, the full amount of student financial assistance was excluded. For some students, the full exclusion still applies.

The regulation requiring the inclusion of certain student financial assistance applies only to students who satisfy all of the following conditions:
x They are enrolled in an institution of higher education, as defined under the Higher Education Act (HEA) of 1965.
x They are seeking or receiving Section 8 assistance on their own—that is, apart from their parents—through the HCV program, the project-based voucher program, or the moderate rehabilitation program.
x They are under 24 years of age OR they have no dependent children.

For students who satisfy these three conditions, any financial assistance in excess of tuition and any other required fees and charges received: (1) under the 1965 HEA, (2) from a private source, or (3) from an institution of higher education, as defined under the 1965 HEA, must be included in annual income.

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Unlimited copies may be made for internal use. Page 6B-14 To determine annual income in accordance with the above requirements, the PHA will use the definitions of dependent child, institution of higher education, and parents in Chapter 3, along with the following definitions [FR 4/10/06, pp. 18148-18150]:
x Assistance under the Higher Education Act of 1965 includes Pell Grants, Federal Supplement Educational Opportunity Grants, Academic Achievement Incentive Scholarships, State Assistance under the Leveraging Educational Assistance Partnership Program, the Robert G.

Byrd Honors Scholarship Program, and Federal Work Study programs. x Assistance from private sources means assistance from nongovernmental sources, including parents, guardians, and other persons not residing with the student in an HCV assisted unit. x Tuition and fees are defined in the same manner in which the Department of Education defines tuition and fees [Notice PIH 2015-21].
- This is the amount of tuition and required fees covering a full academic year most frequently charged to students.
- The amount represents what a typical student would be charged and may not be the same for all students at an institution.
- If tuition is charged on a per-credit-hour basis, the average full-time credit hour load for an academic year is used to estimate average tuition.
- Required fees include all fixed-sum charges that are required of a large proportion of all students. Examples include, but are not limited to, writing and science lab fees and fees specific to the student’s major or program (i.e., nursing program). - Expenses related to attending an institution of higher education must not be included as tuition. Examples include, but are not limited to, room and board, books, supplies, meal plans, transportation and parking, student health insurance plans, and other non-fixedsum charges.

Any student financial assistance not subject to inclusion under the regulations is fully excluded from annual income, whether it is paid directly to the student or to the educational institution the student is attending. This includes any financial assistance received by:
x Students residing with parents who are seeking or receiving Section 8 assistance x Students who are enrolled in an educational institution that does not meet the 1965 HEA definition of institution of higher education
x Students who are over 23 AND have at least one dependent child, as defined in section 3-II.E
x Students who are receiving financial assistance through a governmental program not authorized under the 1965 HEA.

HOTMA Student Financial Assistance Requirements [24 CFR 5.609(b)(9)]

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Unlimited copies may be made for internal use. Page 6B-15 The treatment of student financial assistance depends on the HUD program, student/household characteristics, and the type of financial assistance received by the student.

For public housing residents, all income received under Title IV of the HEA must be excluded from income. Other student financial assistance may be included depending on the students actual covered costs to For Section 8 programs, including HCV, however, for over 10 years HUD appropriations have included a provision that for Section 8 students who are age 23 and under and without dependent children, any amounts received in excess of tuition and any other required fees and charges must be considered income. Under HOTMA, HUD has interpreted this limitation to apply when the student is the head of household or spouse, but not when the student resides with their parents [71 FR 18146].

For any funds from a year where HUD’s appropriations continue to include this Section 8 student financial assistance limitation, if the student does not reside with their parents is the head of household, cohead, or spouse, and is under the age of 23 or without dependent children, then both the assistance received under Title IV HEA and other student financial assistance received by the student is included as income to the extent that it exceeds the total of tuition and any other required fees and charges.

In contrast, student financial assistance received by a Section 8 student who is the head of household, spouse, or cohead, and is over the age of 23 with dependent children, or a student who resides with their parents in a Section 8 unit, is governed by the HOTMA student rule, which is described below.

During years in which an appropriations act does not contain this Section 8 student financial assistance limitation (or any other such limitation), then the determination of student financial assistance for all Section 8 students defaults to the methodology for public housing.

HOTMA Student Financial Assistance Requirements [24 CFR 5.609(b)(9)] The regulations under HOTMA distinguish between two categories of student financial assistance paid to both full-time and part-time students.

Types of Assistance
The first category is Aany assistance to students under section 479B of the Higher Education Act of 1965 (Title IV of the HEA) which must be excluded from the family’s annual income [24 CFR

5.609(b)(9)(i)].

Examples of assistance under title IV of the HEA include:
x Federal Pell Grants;
x Teach Grants;
x Federal Work Study Programs;
x Federal Perkins Loans;
x Income earned in employment and training programs under section 134 of the Workforce Innovation and Opportunity Act (WIOA); or

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Unlimited copies may be made for internal use. Page 6B-16 x Bureau of Indian Affairs/Education student assistance programs - The Higher Education Tribal Grant
- The Tribally Controlled Colleges or Universities Grant Program The second category is Aany other grant-in-aid, scholarship, or other assistance amounts an individual receives for the actual covered costs charged by the institute of higher education (not otherwise excluded by the Federally mandated income exclusions) are excluded [24 CFR

5.609(b)(9)(ii)]. Other student financial assistance received by the student that, either by itself or in combination with HEA assistance, exceeds the actual covered costs is included in income.

Actual covered costs are defined as the actual costs of:
x Tuition, books, and supplies;
- Including supplies and equipment to support students with learning disabilities or other disabilities
x Room and board; and
x Other fees required and charged to a student by the education institution.

For a student who is not the head of household or spouse/cohead, actual covered costs also include the reasonable and actual costs of housing while attending the institution of higher education and not residing in an assisted unit.

Further, to qualify, other student financial assistance must be expressly:
x For tuition, book, supplies, room and board, or other fees required and charged to the student by the educational institution;
x To assist a student with the costs of higher education; or x To assist a student who is not the head of household or spouse with the reasonable and actual costs of housing while attending the educational institution and not residing in an assisted unit.

The student financial assistance may be paid directly to the student or to the educational institution on the student’s behalf. However, any student financial assistance paid to the student must be verified by the PHA.

The financial assistance must be a grant or scholarship received from:
x The Federal government;
x A state, tribal, or local government ;
x A private foundation registered as a nonprofit;
x A business entity (such as corporation, general partnership, limited liability company, limited partnership, joint venture, business trust, public benefit corporation, or nonprofit entity); or
x An institution of higher education.

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Unlimited copies may be made for internal use. Page 6B-17 Student financial assistance, does not include:
x Financial support provided to the student in the form of a fee for services performed; (e.g., a work study or teaching fellowship that is not excluded under section 479B of the Higher Education Act HEA);
x Gifts, including gifts from family or friends; or
x Any amount of the scholarship or grant that, either by itself or in combination with assistance excluded under the HEA, exceeds the actual covered costs of the student.

Calculating Income from Student Financial Assistance [HOTMA Student Financial Assistance Resource Sheet; Notice PIH 2023-27]
There are two steps required as part of the calculation for Section 8 students. First, determine the student’s relationship to the household, age, and whether they have dependent children.

Second, calculate whether any excess student financial assistance should be included in the family’s income.

If the student does not live with their parents and is the head of household, cohead, or spouse, and is 23 or younger or does not have dependent children, then Title IV HEA assistance is considered when determining the student’s total financial aid amount. Subtract the total tuition plus required fees and charges from the total student financial assistance (Title IV HEA assistance and any other student financial assistance). If the total tuition plus required fees and charges is zero or exceeds the amount of total financial assistance from all sources, then no student financial assistance is included in annual income. Any amount of student financial assistance that exceeds the total tuition plus required fees and charges must be included in annual income.

The formula for calculating the amount of other student financial assistance that is excluded from income If the student either lives with their parents or is over 23 with dependent children, then the calculation will use the HOTMA methodology for calculating financial assistance, which always begins with deducting the assistance received under 479B of the HEA from the total actual covered costs, because the 479B assistance is intended to pay the student’s actual covered costs. When a student receives assistance from both Title IV of the HEA and from other sources, the assistance received under Title IV of the HEA must be applied to the student’s actual covered costs first and then other student financial assistance is applied to any remaining actual covered costs. Once actual costs are covered, any remaining student financial assistance is considered income.

PHA Policy
If the student does not live with their parents and is the head of household, cohead, or spouse, and is 23 or younger or does not have dependent children, then Title IV HEA assistance will be considered when determining the student’s total financial assistance to be included in annual income. The PHA will use Notice PIH 2015-21 as a guide to determine the total amount of the student’s tuition plus required fees and charges. The

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Unlimited copies may be made for internal use. Page 6B-18 PHA will subtract the total tuition plus required fees and charges from the total student financial assistance. If the result is zero or exceeds the amount of total financial assistance from all sources, then no student financial assistance will be included in annual income. Any amount of student financial assistance that exceeds the total tuition plus required fees and charges will be included in annual income.

Example 1
x Tuition and required fees and charges: $20,000
x Title IV HEA assistance: $10,000
x Other student financial assistance: $15,000
x Total student financial assistance: $10,000 + $15,000 = $25,000 x Included income: $25,000 in financial assistance - $20,000 tuition and required fees = $5,000
If a student is head, spouse, or cohead, and is over 23 with dependent children or lives with their parents, the following applies: If a student only receives financial assistance under Title IV of the HEA and does not receive any other student financial assistance, the PHA will exclude the full amount of the assistance received under Title IV from the family’s annual income. The PHA will not calculate actual covered costs in this case.

If the student does not receive any assistance under Title IV of the HEA but does receive assistance from another source, the PHA will first calculate the actual covered costs to the student in accordance with 24 CFR 5.609(b)(ii). The PHA will then subtract the total amount of the student’s financial assistance from the student’s actual covered costs.

The PHA will include any amount of financial assistance in excess of the student’s actual covered costs in the family’s annual income.

Example 1
x Actual covered costs: $20,000
x Other student financial assistance: $25,000
x Excluded income: $20,000 ($25,000 in financial assistance - $20,000 in actual covered costs)
x Included income: $5,000
When a student receives assistance from both Title IV of the HEA and from other sources, the PHA will first calculate the actual covered costs to the student in accordance with 24 CFR 5.609(b)(ii). The assistance received under Title IV of the HEA will be applied to the student’s actual covered costs first and then the other student financial assistance will be applied to any remaining actual covered costs.

If the amount of assistance excluded under Title IV of the HEA equals or exceeds the

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Unlimited copies may be made for internal use. Page 6B-19 actual covered costs, none of the assistance included under other student financial assistance” would be excluded from income.

Example 2
x Actual covered costs: $25,000
x Title IV HEA assistance: $26,000
x Title IV HEA assistance covers the student’s entire actual covered costs.
x Other Student Financial Assistance: $5,000
x Excluded income: The entire Title IV HEA assistance of $26,000 x Included income: All other financial assistance of $5,000 If the amount of assistance excluded under Title IV of the HEA is less than the actual covered costs, the PHA will exclude the amount of other student financial assistance up to the amount of the remaining actual covered costs.

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Unlimited copies may be made for internal use. Page 6B-20 Example 3
x Actual covered costs: $22,000
x Title IV HEA assistance: $15,000
x The remaining amount not covered by Title IV HEA assistance is $7,000 ($22,000 in actual covered costs - $15,000 in Title IV HEA assistance).
x Other Student Financial Assistance: $5,000
x $7,000 in remaining actual covered costs - $5,000 in other financial assistance
x Excluded income: $15,000 entire amount of the Title IV HEA Assistance + $5,000 in other financial assistance
x Included income: $0
Example 4
x Actual covered costs: $18,000
x Title IV HEA Assistance: $15,000
x The remaining amount not covered by Title IV HEA assistance is $3,000 ($18,000 in actual covered costs - $15,000 in Title IV HEA Assistance)
x Other student Financial Assistance: $5,000
x When other student financial assistance is applied, financial assistance exceeds actual covered costs by $2,000 ($3,000 in actual covered costs - $5,000 in other financial assistance).
x Included income: $2,000 (the amount by which the financial aid exceeds the student's actual covered costs).

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Unlimited copies may be made for internal use. Page 6B-21 6B-I.H. PERIODIC PAYMENTS
Periodic payments are forms of income received on a regular basis. HUD regulations specify periodic payments that are not included in annual income. Regulations do not specify which types of periodic payments are included in annual income.

Income that will not be repeated beyond the coming year (i.e., the 12 months following the effective date of the certification), based on information provided by the family, is considered nonrecurring income and is excluded from annual income. Income that has a discrete end date and will not be repeated beyond the coming year is excluded from a family’s annual income because it is nonrecurring income. For example, a family receives income from a guaranteed income program in their city that has a discrete beginning and end date. While the guaranteed income will be repeated in the coming year, it will end before the family’s next annual reexamination. This income is fully excluded from annual income.

However, this does not include unemployment income and other types of periodic payments that are received at regular intervals (such as weekly, monthly, or yearly). Unemployment income and other types of periodic payments are not considered nonrecurring income, unless explicitly excluded from income under 25 CFR 5.609(b), and thus they are included in annual income.for a period of greater than one year that can be extended. For example, a family receives income from a guaranteed income program in their city that has a discrete beginning and end date. While the guaranteed income will be repeated in the coming year, it will end before the family’s next annual reexamination. This income is fully excluded from annual income.

Insurance payments and settlements for personal or property losses, including but not limited to payments under health insurance, motor vehicle insurance, and workers’ compensation, are excluded from annual income. Any workers’ compensation is always excluded from annual income, regardless of the frequency or length of the payments. However, periodic payments paid at regular intervals (such as weekly, monthly, or yearly) for a period of greater than one year that are received in lieu of wages for workers’ compensation are included in annual income. Payments received in lieu of wages for worker’s compensation are excluded, even if paid in periodic payments, if the income will last for a period of less than one year.

Lump-Sum Payments for the Delayed Start of a Periodic Payment [24 CFR 5.609(b)(16)] Deferred periodic amounts from Supplemental Security Income (SSI) and Social Security benefits that are received in a lump sum amount or in prospective monthly amounts, or any deferred Department of Veterans Affairs (VA) disability benefits that are received in a lump sum amount or in prospective monthly amounts are excluded from annual income.

PHA Policy
The PHA will include in annual income lump sums received as a result of delays in processing periodic payments (other than those specifically excluded by the regulation), such as unemployment or welfare assistance.

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Unlimited copies may be made for internal use. Page 6B-22 When a delayed-start payment is received that is to be included and the family reports this during the period in which the PHA is processing an annual reexamination, the PHA will adjust the family’s rent retroactively for the period the payment was intended to cover.

If the delayed-start payment is received outside of the time the PHA is processing an annual reexamination, then the PHA will consider whether the amount meets the threshold to conduct an interim reexamination. If so, the PHA will conduct an interim in accordance with PHA policies in Chapter 11. If not, the PHA will consider the amount when processing the family’s next annual recertification.

Retirement Accounts [24 CFR 5.609(b)(26); Notice PIH 2023-27] Income received from any account under a retirement plan recognized as such by the IRS, including individual retirement arrangements (IRAs), employer retirement plans, and retirement plans for self-employed individuals is not considered actual income from assets.

However, any distribution of periodic payments from such accounts is included in annual income at the time they are received by the family.

An asset moved to a retirement account held by a member of the family is not considered to be an asset disposed of for less than fair market value.

Social Security Benefits [Notice PIH 2018-24]
The PHA is required to use the gross benefit amount to calculate annual income from Social Security benefits.

Annually in October, the Social Security Administration (SSA) announces the cost-of-living adjustment (COLA) by which federal Social Security and SSI benefits are adjusted to reflect the increase, if any, in the cost of living. The federal COLA does not apply to state-paid disability benefits. Effective the day after the SSA has announced the COLA, PHAs are required to factor in the COLA when determining Social Security and SSI annual income for all annual reexaminations and interim reexaminations of family income that have not yet been completed and will be effective January 1 or later of the upcoming year [Notice PIH 2023-27]. When a family member’s benefits are garnished, levied, or withheld to pay restitution, child support, tax debt, student loan debt, or other debts, the PHA must use the gross amount of the income, prior to the reduction, to determine a family’s annual income.

PHA Policy
Annual income includes “all amounts received,” not the amount that a family may be legally entitled to receive but which they do not receive. When the SSA overpays an individual, resulting in a withholding or deduction from their benefit amount until the overpayment is paid in full, the PHA will use the reduced benefit amount after deducting only the amount of the overpayment withholding from the gross benefit amount.

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Unlimited copies may be made for internal use. Page 6B-23 Alimony and Child Support
PHA Policy
The PHA will count court-awardedall regular amounts offor alimony and child support awarded as part of a divorce or separation agreement unless the PHA verifies that the payments are not being made.
unless the PHA verifies that: (1) the payments are not being made, and (2) the family has made reasonable efforts to collect amounts due, including filing with courts or agencies responsible for enforcing payments [HCV GB, pp. 5-23 and 5-47].

In order to verify that payments are not being made, the PHA will review child support payments over the last three months. If no payments have been made in the past three months and there are no lump sums, the PHA will not include alimony or child support in annual income.

If payments are being made regularly, the PHA will use the amount received during the last 12 months (excluding any lump sums received). If payments have been made for a period less than 12 months, the PHA will average all payments that have been made.

At new admission or interim recertification, if any lump sum payments were made in the past 12 months, the PHA will determine the likelihood of the family receiving another similar payment within the next 12 months before deciding whether or not this amount will be included in the calculation of annual income.

If the PHA determines and can appropriately verify that the family in all likelihood will not receive a similar payment, then the amount will not be considered when projecting annual income.

If the PHA determines that it is likely that the family will receive a similar payment and can appropriately verify it, the amount will be included when projecting annual income.

Families who do not have court-awarded alimony and child support awards are not required to seek a court award and are not required to take independent legal action to obtain collection.

If no payments have been made in the past three months and there are no lump sums, the PHA will not include alimony or child support in annual income. 6B-I.I. NONRECURRING INCOME [24 CFR 5.609(B)(24) AND NOTICE PIH 2023-27] Income received as an independent contractor, day laborer, or seasonal worker is not excluded from income as nonrecurring income, even if the source, date, or amount of the income varies.

Income that has a discrete end date and will not be repeated beyond the coming year during the family’s upcoming annual reexamination period will be excluded from a family’s annual income as nonrecurring income. This exclusion does not include unemployment income and

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Unlimited copies may be made for internal use. Page 6B-24 other types of periodic payments that are received at regular intervals (such as weekly, monthly, or yearly) for a period of greater than one year that can be extended.

Income amounts excluded under this category may include, but are not limited to:
x Nonrecurring payments made to the family or to a third party on behalf of the family to assist with utilities;
x Payments for eviction prevention;
x Security deposits to secure housing;
x Payments for participation in research studies (depending on the duration); and x General one-time payments received by or on behalf of the family.

Nonrecurring income that is excluded under the regulations includes:
x Payments from the U.S. Census Bureau for employment (relating to decennial census or the American Community Survey) lasting no longer than 180 days and not culminating in permanent employment [24 CFR 5.609(b)(24)(i)].
x Direct federal or state payments intended for economic stimulus or recovery [24 CFR

5.609(b)(24)(ii)].
x Amounts directly received by the family as a result of state refundable tax credits or state or federal tax refunds at the time they are received [24 CFR 5.609(b)(24)(iii) and (iv)]. x Gifts for holidays, birthdays, or other significant life events or milestones (e.g., wedding gifts, baby showers, anniversaries) [24 CFR 5.609(b)(24)(v)]. x Non-monetary, in-kind donations, such as food, clothing, or toiletries, received from a food bank or similar organization [24 CFR 5.609(b)(24)(vi)]. When calculating annual income, PHAs are prohibited from assigning monetary value to non-monetary in-kind donations received by the family [Notice PIH 2023-27]. Non-recurring, non-monetary in-kind donations from friends and family are excluded as non-recurring income. However, the value of regular in-kind donations (such as the value of groceries) received by friends and family are included.
x Lump-sum additions to net family assets, including but not limited to lottery or other contest winnings [24 CFR 5.609(b)(24)(vii)].
6B-I.J. WELFARE ASSISTANCE
Overview
Welfare assistance is counted in annual income. Welfare assistance includes Temporary Assistance for Needy Families (TANF) and any payments to individuals or families based on need that are made under programs funded separately or jointly by federal, state, or local governments.

Sanctions Resulting in the Reduction of Welfare Benefits [24 CFR 5.615]

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Unlimited copies may be made for internal use. Page 6B-25 The PHA must make a special calculation of annual income when the welfare agency imposes certain sanctions on certain families. The full text of the regulation at 24 CFR 5.615 is provided as Exhibit 6-3. The requirements are summarized below. This rule applies only if a family was receiving HCV assistance at the time the sanction was imposed.

Covered Families
The families covered by 24 CFR 5.615 are those “who receive welfare assistance or other public assistance benefits (‘welfare benefits’) from a State or other public agency (’welfare agency’) under a program for which Federal, State or local law requires that a member of the family must participate in an economic self-sufficiency program as a condition for such assistance” [24 CFR 5.615(b)]
Imputed Income
When a welfare agency imposes a sanction that reduces a family’s welfare income because the family commits fraud or fails to comply with the agency’s economic self-sufficiency program or work activities requirement, the PHA must include in annual income “imputed” welfare income.

The PHA must request that the welfare agency provide the reason for the reduction of benefits and the amount of the reduction of benefits. The imputed welfare income is the amount that the benefits were reduced as a result of the sanction.

This requirement does not apply to reductions in welfare benefits: (1) at the expiration of the lifetime or other time limit on the payment of welfare benefits, (2) if a family member is unable to find employment even though the family member has complied with the welfare agency economic self-sufficiency or work activities requirements, or (3) because a family member has not complied with other welfare agency requirements [24 CFR 5.615(b)(2)].

Offsets
The amount of the imputed welfare income is offset by the amount of additional income the family begins to receive after the sanction is imposed. When the additional income equals or exceeds the imputed welfare income, the imputed income is reduced to zero [24 CFR

5.615(c)(4)].
6B-I.K. STATE PAYMENTS TO ALLOW INDIVIDUALS WITH DISABILITIES TO LIVE AT HOME [24 CFR 5.609(B)(19)]
Payments made by or authorized by a state Medicaid agency (including through a managed care entity) or other state or federal agency to an assisted family to enable a member of the assisted family who has a disability to reside in the family’s assisted unit are excluded.

Authorized payments may include payments to a member of the assisted family through state Medicaid-managed care systems, other state agencies, federal agencies or other authorized entities.

The payments must be received for caregiving services a family member provides to enable another member of the assisted family who has a disability to reside in the family’s assisted

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Unlimited copies may be made for internal use. Page 6B-26 unit. Payments to a family member for caregiving services for someone who is not a member of the assisted family (such as for a relative that resides elsewhere) are not excluded from income.

Furthermore, if the agency is making payments for caregiving services to the family member for an assisted family member and for a person outside of the assisted family, only the payments attributable to the caregiving services for the caregiver’s assisted family member would be excluded from income.
6B-I.L. CIVIL RIGHTS SETTLEMENTS [24 CFR 5.609(B)(25); FR NOTICE 2/14/23] Regardless of how the settlement or judgment is structured, civil rights settlements or judgments, including settlements or judgments for back pay, are excluded from annual income.

This may include amounts received because of litigation or other actions, such as conciliation agreements, voluntary compliance agreements, consent orders, other forms of settlement agreements, or administrative or judicial orders under the Fair Housing Act, Title VI of the Civil Rights Act, Section 504 of the Rehabilitation Act (Section 504), the Americans with Disabilities Act, or any other civil rights or fair housing statute or requirement.

While these civil rights settlement or judgment amounts are excluded from income, the settlement or judgment amounts will generally be counted toward the family’s net family assets (e.g., if the funds are deposited into the family’s savings account or a revocable trust under the control of the family or some other asset that is not excluded from the definition of net family assets). Income generated on the settlement or judgment amount after it has become a net family asset is not excluded from income. For example, if the family received a settlement or back pay and deposited the money in an interest-bearing savings account, the interest from that account would be income at the time the interest is received.

Furthermore, if a civil rights settlement or judgment increases the family’s net family assets such that they exceed the HUD-published threshold amount($50,000 for 2024, and $51,600 for 2025), $50,000 (as annually adjusted by an inflationary factor), then income will be imputed on the net family assets pursuant to 24 CFR 5.609(a)(2). If the imputed income, which HUD considers unearned income, increases the family’s annual adjusted income by 10 percent or more, then an interim reexamination of income will be required unless the addition to the family’s net family assets occurs within the last three months of the family’s income certification period and the PHA or owner chooses not to conduct the examination. 6B-I.M. ADDITIONAL EXCLUSIONS FROM ANNUAL INCOME [24 CFR 5.609(B); FR NOTICE 1/31/2024]
Other exclusions contained in 24 CFR 5.609(b) and FR Notice 1/31/24 that have not been discussed earlier in this chapter include the following:
x Payments received for the care of foster children or foster adults or state or tribal kinship or guardianship care payments [24 CFR 5.609(b)(4)].
x Insurance payments and settlements for personal or property losses, including but not limited to payments through health insurance, motor vehicle insurance, and workers’

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Unlimited copies may be made for internal use. Page 6B-27 compensation [24 CFR 5.609(b)(5)]. However, periodic payments paid at regular intervals (such as weekly, monthly, or yearly) for a period of greater than one year that are received in lieu of wages for workers’ compensation are included in annual income [Notice PIH 2023- 27].
x Amounts received by the family that are specifically for, or in reimbursement of, the cost of health and medical care expenses for any family member [24 CFR 5.609(b)(6)]. x Any amounts recovered in any civil action or settlement based on a claim of malpractice, negligence, or other breach of duty owed to a family member arising out of law, that resulted in a member of the family becoming disabled [24 CFR 5.609(b)(7)]. x Income and distributions from any Coverdell education savings account under Section 530 of the Internal Revenue Code of 1986 or any qualified tuition program under Section 529 of such Code [24 CFR 5.609(b)(10)].
x Income earned by government contributions to, and distributions from, “baby bond” accounts created, authorized, or funded by federal, state, or local government [24 CFR

5.609(b)(10)].
x The special pay to a family member serving in the Armed Forces who is exposed to hostile fire [24 CFR 5.609(b)(11)].
x Payments related to aid and attendance under 38 U.S.C. 1521 to veterans in need of regular aid and attendance [24 CFR 5.609(b)(17)]. This income exclusion applies only to veterans in need of regular aid and attendance and not to other beneficiaries of the payments, such as a surviving spouse [Notice PIH 2023-27].
x Loan proceeds (the net amount disbursed by a lender to or on behalf of a borrower, under the terms of a loan agreement) received by the family or a third party (e.g., proceeds received by the family from a private loan to enable attendance at an educational institution or to finance the purchase of a car) [24 CFR 5.609(b)(20)]. The loan borrower or co-borrower must be a member of the family for this income exclusion to be applicable [Notice PIH 2023-27].
x Payments received by tribal members as a result of claims relating to the mismanagement of assets held in trust by the United States, to the extent such payments are also excluded from gross income under the Internal Revenue Code or other federal law [24 CFR

5.609(b)(21)]. Generally, payments received by tribal members in excess of the first $2,000 of per capita shares are included in a family’s annual income for purposes of determining eligibility. However, as explained in Notice PIH 2023-27, payments made under the Cobell Settlement, and certain per capita payments under the recent Tribal Trust Settlements, must be excluded from annual income in HUD programs that adopt the definitions of annual income in 24 CFR 5.609, the Census Long Form, and the IRS Form 1040, including the programs affected by Notice PIH 2023-27.
x Replacement housing “gap” payments made in accordance with 49 CFR Part 24 that offset increased out of pocket costs of displaced persons that move from one federally subsidized housing unit to another federally subsidized housing unit. Such replacement housing “gap”

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Unlimited copies may be made for internal use. Page 6B-28 payments are not excluded from annual income if the increased cost of rent and utilities is subsequently reduced or eliminated, and the displaced person retains or continues to receive the replacement housing “gap” payments [24 CFR 5.609(b)(23)]. x Income earned on amounts placed in a family’s Family Self-Sufficiency account [24 CFR

5.609(b)(27)].
x Amounts received by participants in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred e.g., special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program [24 CFR 5.609(i)(12)(ii)].
x Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS) [(24 CFR 5.609(b)(12)(i)]. x Amounts received under a resident service stipend not to exceed $200 per month. A resident service stipend is a modest amount received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development [24 CFR 5.609 I(12)(ii)].

Incremental earnings and benefits to any family member resulting from participation in qualifying training program funded by HUD or in qualifying federal, state, tribal, or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff are excluded from annual income. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives and are excluded only for the period during which the family member participates in the training program unless those amounts are excluded under 24 CFR 5.609(b)(9)(i) [24 CFR 5.609(b)(12)(iv)].

PHA Policy
The PHA defines training program as “a learning process with goals and objectives, generally having a variety of components, and taking place in a series of sessions over a period of time. It is designed to lead to a higher level of proficiency, and it enhances the individual’s ability to obtain employment. It may have performance standards to measure proficiency. Training may include but is not limited to: (1) classroom training in a specific occupational skill, (2) on-the-job training with wages subsidized by the program, or (3) basic education” [expired Notice PIH 98-2, p. 3].

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Unlimited copies may be made for internal use. Page 6B-29 The PHA defines incremental earnings and benefits as the difference between (1) the total amount of welfare assistance and earnings of a family member prior to enrollment in a training program and (2) the total amount of welfare assistance and earnings of the family member after enrollment in the program [expired Notice PIH 98-2, pp. 3–4].

In calculating the incremental difference, the PHA will use as the pre-enrollment income the total annualized amount of the family member’s welfare assistance and earnings reported on the family’s most recently completed HUD-50058.

End of participation in a training program must be reported in accordance with the PHA’s interim reporting requirements (see Chapter 11).
x Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era [24 CFR

5.609(b)(13)].
x Adoption assistance payments for a child in excess of the amount of the dependent deduction per adopted child [24 CFR 5.609(b)(15)].
x Refunds or rebates on property taxes paid on the dwelling unit [24 CFR 5.609(b)(20)]. x Amounts that HUD is required by federal statute to exclude from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in 24 CFR

5.609(b) apply. HUD will publish a notice in the Federal Register to identify the benefits that qualify for this exclusion. Updates will be published when necessary.

HUD publishes an updated list of these exclusions periodically. The most recent list of exclusions was published in the Federal Register on January 31, 2024May 20, 2014. It includes:
(a) The value of the allotment provided to an eligible household under the Food Stamp Act of 1977 (7 U.S.C. 2017 (b)) This exclusion also applies to assets. (b) Benefits under Section 1780 of the Richard B. Russell School Lunch Act and Child Nutrition Act of 1966, including WIC and reduced-price lunches. (c) Payments, including for supportive services and reimbursement of out-of-pocket expenses, to volunteers under the Domestic Volunteer Services Act of 1973 (42 U.S.C. 5044(g), 5058). The exclusion also applies to assets.
(d) Certain pPayments received under the Alaska Native Claims Settlement Act (43 U.S.C. 1626(c))
(e) Income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes (25 U.S.C. 459e5506)
(f) Payments or allowances made under the Department of Health and Human Services’ Low-Income Home Energy Assistance Program (42 U.S.C. 8624(f)(I))

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Unlimited copies may be made for internal use. Page 6B-30 (g) Allowances, earnings, and payments to individuals participating in programs under the Workforce Investment Act of 1998 which was reauthorized as the Workforce Innovation and Opportunity Act of 2014 (29 U.S.C. 3241(a)(2))Payments received under programs funded in whole or in part under the Workforce Investment Act of 1998 (29 U.S.C. 2931)
(h) Deferred disability benefits from the Department of Veterans Affairs, whether received as a lump sum or in monthly prospective amounts
(i) Income derived from the disposition of funds to the Grand River Band of Ottawa Indians (Pub. L. 94-540, 90 Section 6Stat. 2503-04)
(j) Payments, funds, or distributions authorized, established, or directed by the Seneca Nation Settlement Act of 1990 (25 U.S.C. 1774f(b))
(k) A lump sum or periodic payment received by an individual Indian pursuant to the Class Action Settlement Agreement in the United States District Court case entitled Elouise Cobell et al. v. Ken Salazar et al., for a period of one year from the time of receipt of that payment as provided in the Claims Resolution Act of 2010 (l) The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the U. S. Claims Court, the interests of individual Indians in trust or restricted lands, including the first $2,000 per year of income received by individual Indians from funds derived from interests held in such trust or restricted lands (25 U.S.C. 1407-1408). This exclusion does not include proceeds of gaming operations regulated by the Commission (25 U.S.C. 1407–1408). (m) Benefits under the Indian Veterans Housing Opportunity Act of 2010 (only applies to Native American housing programs)
(mn) Payments received from programs funded under Title V of the Older Americans Act of 19685 (42 U.S.C. 3056(f))
(no) Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in In Re Agent Orange product liability litigation, M.D.L. No. 381 (E.D.N.Y.) This exclusion also applies to assets.
(op) Payments received under 38 U.S.C. 1833(c) to children of Vietnam veterans born with spinal bifida, children of women Vietnam veterans born with certain birth defects, and children of certain Korean and Thailand service veterans born with spinal bifida (42 U.S.C. 12637(d)).
(pq) Payments received under the Maine Indian Claims Settlement Act of 1980 (25 U.S.C. 1721). This exclusion also applies to assets.
(qr) The value of any child care provided or arranged (or any amount received as payment for such care or reimbursement for costs incurred for such care) under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858q)

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Unlimited copies may be made for internal use. Page 6B-31 (rs) Earned income tax credit (EITC) refund payments received on or after January 1, 1991 (26 U.S.C. 32(j)) . This exclusion also applies to assets. (st) Payments by the Indian Claims Commission to the Confederated Tribes and Bands of Yakima Indian Nation or the Apache Tribe of Mescalero Reservation (Pub. L. 95-433).

This exclusion also applies to assets.
(tu) Amounts of student financial assistancescholarships funded under Title IV of the Higher Education Act of 1965j, including awards under federal work-study programs or under the Bureau of Indian Affairs student assistance programs (20 U.S.C. 1087uu). For Section 8 programs, only, any financial assistance in excess of amounts received by an individual for tuition and any other required fees and charges under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), from private sources, or an institution of higher education (as defined under the Higher Education Act of 1965 (20 U.S.C. 1002)), shall be considered income if the individual is over the age of 23 with dependent children (Pub. L. 109–115, section 327 (as amended)).the exception found in § 237 of Public Law 109–249 applies and requires that the amount of financial assistance in excess of tuition and mandatory fees shall be considered income in accordance with the provisions codified at 24 CFR 5.609(b)(9), except for those persons with disabilities as defined by 42 U.S.C. 1437a(b)(3)(E) (Pub. L. 109–249) (See Section 6-I.L. for exceptions.)
(uv) Allowances, earnings and payments to AmeriCorps participants under the National and Community Service Act of 1990 (42 U.S.C. 12637(d))
(vw) Any amount of crime victim compensation that provides medical or other assistance (or payment or reimbursement of the cost of such assistance) under the Victims of Crime Act of 1984 received through a crime victim assistance program, unless the total amount of assistance that the applicant receives from all such programs is sufficient to fully compensate the applicant for losses suffered as a result of the crime (34 U.S.C. 20102(c) (under the Victims of Crime Act) received through crime victim assistance (or payment or reimbursement of the cost of such assistance) as determined under the Victims of Crime Act because of the commission of a crime against the applicant under the Victims of Crime Act (42 U.S.C. 10602)
(wx) Any amounts in an "individual development account" are excluded from assets and any assistance, benefit, or amounts earned by or provided to the individual development account are excluded from income, as provided by the Assets for Independence Act, as amended (42 U.S.C. 604(h)(4)).as provided by the Assets for Independence Act, as amended in 2002
(y) Payments made from the proceeds of Indian tribal trust cases as described in Notice PIH 2013–30, "Exclusion from Income of Payments under Recent Tribal Trust Settlements" (25 U.S.C. 117b(a))
(xz) Major disaster and emergency assistance received under the Robert T. Stafford Disaster Relief and Emergency Assistance Act and comparable disaster assistance

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Unlimited copies may be made for internal use. Page 6B-32 provided by states, local governments, and disaster assistance organizations. This exclusion also applies to assets.
(yaa) Distributions from an ABLE account, distributions from and certain contributions to an ABLE account established under the ABLE Act of 2014 (Pub. L. 113–295.), as described in Notice PIH 2019–09 or subsequent or superseding notice is excluded from income and assets.and actual or imputed interest on the ABLE account balance [See also Notice PIH 2019-09]
(z) The amount of any refund (or advance payment with respect to a refundable credit) issued under the Internal Revenue Code is excluded from income and assets for a period of 12 months from receipt (26 U.S.C. 6409).
(aa) Assistance received by a household under the Emergency Rental Assistance Program pursuant to the Consolidated Appropriations Act, 2021 (Pub. L. 116–260, section 501(j)), and the American Rescue Plan Act of 2021.
(ab) Per capita payments made from the proceeds of Indian Tribal Trust Settlements listed in IRS Notice 2013-1 and 2013-55 must be excluded from annual income unless the per capita payments exceed the amount of the original Tribal Trust Settlement proceeds and are made from a Tribe’s private bank account in which the Tribe has deposited the settlement proceeds. Such amounts received in excess of the Tribal Trust Settlement are included in the gross income of the members of the Tribe receiving the per capita payments as described in IRS Notice 2013-1. The first $2,000 of per capita payments are also excluded from assets unless the per capita payments exceed the amount of the original Tribal Trust Settlement proceeds and are made from a Tribe’s private bank account in which the Tribe has deposited the settlement proceeds (25 U.S.C. 117b(a), 25 U.S.C. 1407).
(ac) Any amounts (i) not actually received by the family, (ii) that would be eligible for exclusion under 42 U.S.C. 1382b(a)(7), and (iii) received for service-connected disability under 38 U.S.C. Chapter 11 or dependency and indemnity compensation under 38 U.S.C. Chapter 13 (25 U.S.C. 4103(9)(C)) as provided by an amendment by the Indian Veterans Housing Opportunity Act of 2010 (Pub. L. 111–269 section 2) to the definition of income applicable to programs under the Native American Housing Assistance and Self-Determination Act (NAHASDA) (25 U.S.C. 4101 et seq.).

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Unlimited copies may be made for internal use. Page 6B-33 PART II: ASSETS
6B-II.A. OVERVIEW
Annual income includes all actual anticipated income from assets (unless otherwise excluded by the regulations) even if the asset itself is excluded from net family assets [Notice PIH 2023-27].

The regulation at 24 CFR 5.603(b)(3) provides a list of items that are excluded from the calculation of net family assets. Note, unlike previous versions of the regulations, the current regulations do not list types of assets that are included in annual income. Instead, HUD relies on the definition of items excluded from assets to provide the scope of what is included. Exhibit 6- 2 provides the regulatory definition of net family assets.

Optional policies for family self-certification of assets are found in Chapter 7. Policies related to the asset limitation may be found in Chapter 3.

Income from assets is always anticipated, irrespective of the income examination type.

PHA Policy
The PHA generally will use current circumstances to determine both the value of an asset and the anticipated income from the asset. The PHA will use other than current circumstances to anticipate income when (1) an imminent change in circumstances is expected, (2) it is not feasible to anticipate a level of income over 12 months, or (3) the PHA believes that past income is the best indicator of anticipated income. For example, if a family member owns real property that typically receives rental income, but the property is currently vacant, the PHA can take into consideration past rental income along with the prospects of obtaining a new tenant.

Any time current circumstances are not used to determine asset income, a clear rationale for the decision will be documented in the file. In such cases the family may present information and documentation to the PHA to show why the asset income determination does not represent the family’s anticipated asset income.

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Unlimited copies may be made for internal use. Page 6B-34 6B-II.B. ASSETS DISPOSED OF FOR LESS THAN FAIR MARKET VALUE [24 CFR 5.603(B)(2)] PHAs must include the value of any business or family assets disposed of by an applicant or participant for less than fair market value (including a disposition in trust, but not in a foreclosure or bankruptcy sale) during the two years preceding the date of application or reexamination, as applicable, in excess of the consideration received for the asset. An asset moved to a retirement account held by a member of the family is not considered to be an asset disposed of for less than fair market value. [Notice PIH 2023-27].

The family must certify whether any assets have been disposed of for less than fair market value in the preceding two years.

Minimum Threshold
The HCV Guidebook permits the PHA to set a threshold below which assets disposed of for less than fair market value will not be counted [HCV GB, p. 5-27].

PHA Policy
The PHA will not include the value of assets disposed of for less than fair market value unless the cumulative fair market value of all assets disposed of during the past two years exceeds the gross amount received for the assets by more than $1,000.

When the two-year period expires, the income assigned to the disposed asset(s) also expires. If the two-year period ends between annual recertifications, the family may request an interim recertification to eliminate consideration of the asset(s).

Assets placed by the family in nonrevocable trusts are considered assets disposed of for less than fair market value except when the assets placed in trust were received through settlements or judgments.

Separation or Divorce
The regulation also specifies that assets are not considered disposed of for less than fair market value if they are disposed of as part of a separation or divorce settlement and the applicant or tenant receives important consideration not measurable in dollar terms.

PHA Policy
All assets disposed of as part of a separation or divorce settlement will be considered assets for which important consideration not measurable in monetary terms has been received. In order to qualify for this exemption, a family member must be subject to a formal separation or divorce settlement agreement established through arbitration, mediation, or court order.

Foreclosure or Bankruptcy
Assets are not considered disposed of for less than fair market value when the disposition is the result of a foreclosure or bankruptcy sale. Negative equity in real property or other investments

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Unlimited copies may be made for internal use. Page 6B-35 does not prohibit the owner from selling the property or other investments, so negative equity alone would not justify excluding the property or other investments from family assets.

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Unlimited copies may be made for internal use. Page 6B-36 Asset Owned by a Business Entity
If a business entity (e.g., limited liability company or limited partnership) owns the asset, then the family’s asset is their ownership stake in the business, not some portion of the business’s assets. However, if the family holds the assets in their own name (e.g., they own one third of a restaurant) rather than in the name of a business entity, then the percentage value of the asset owned by the family is what is counted toward net family assets (e.g., one-third of the value of the restaurant) [Notice PIH 2023-27].

Family Declaration
PHA Policy
Families must sign a declaration form at initial certification and each annual recertification identifying all assets that have been disposed of for less than fair market value or declaring that no assets have been disposed of for less than fair market value.

The PHA may verify the value of the assets disposed of if other information available to the PHA does not appear to agree with the information reported by the family.

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Unlimited copies may be made for internal use. Page 6B-37 6B-II.C. ASSET INCLUSIONS AND EXCLUSIONS
Necessary and Non-Necessary Personal Property [24 CFR 5.603(b)(3)(i)] All assets are categorized as either real property (e.g., land, a home) or personal property.

Personal property includes tangible items, like boats, as well as intangible items, like bank accounts.

The value of necessary items of personal property is excluded from the calculation of net family assets. Necessary items of personal property include a car used for commuting or medical devices.

HUD defines necessary personal property as items essential to the family for the maintenance, use, and occupancy of the premises as a home; or they are necessary for employment, education, or health and wellness. Necessary personal property includes more than merely items that are indispensable to the bare existence of the family. It may include personal effects (such as items that are ordinarily worn or utilized by the individual), items that are convenient or useful to a reasonable existence, and items that support and facilitate daily life within the family’s home. Necessary personal property also includes items that assist a household member with a disability, including any items related to disability-related needs, or that may be required for a reasonable accommodation for a person with a disability. Necessary personal property does not include bank accounts, other financial investments, or luxury items. Items of personal property that do not qualify as necessary personal property are classified as non-necessary personal property.

The combined value of all non-necessary items of personal property is only included in annual income when the combined total value exceeds the HUD-published threshold amount (adjusted annually and published in HUD’s current year Inflation-Adjusted Values tables). When the combined value of all non-necessary personal property does not exceed the HUD-published threshold amount, all non-necessary personal property is excluded from net family assets. x The threshold amount is $50,000 for 2024, and $51,600 for 2025.

While not an exhaustive list, the following table from Notice PIH 2023-27 provides examples of necessary and non-necessary personal property.

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Unlimited copies may be made for internal use. Page 6B-38 Necessary Personal Property Non-Necessary Personal Property Car(s)/vehicle(s) that a family relies on for
transportation for personal or business use
(e.g., bike, motorcycle, skateboard, scooter)
Furniture, carpets, linens, kitchenware
Common appliances
Common electronics (e.g., radio, television,
DVD player, gaming system)
Clothing
Personal effects that are not luxury items
(e.g., toys, books)
Wedding and engagement rings
Jewelry used in religious/cultural
celebrations and ceremonies
Religious and cultural items
Medical equipment and supplies
Health care–related supplies
Musical instruments used by the family
Personal computers, phones, tablets, and
related equipment
Professional tools of trade of the family, for
example professional books
Educational materials and equipment used
by the family, including equipment to
accommodate persons with disabilities
Equipment used for exercising (e.g.,
treadmill, stationary bike, kayak,
paddleboard, ski equipment)
Recreational car/vehicle not needed for dayto-day transportation for personal or business use (campers, motorhomes,
traveling trailers, all-terrain vehicles (ATVs))
Bank accounts or other financial investments
(e.g., checking account, savings account,
stocks/bonds)
Recreational boat/watercraft
Expensive jewelry without religious or
cultural value, or which does not hold family
significance
Collectibles (e.g., coins/stamps)
Equipment/machinery that is not used to
generate income for a business
Items such as gems/precious metals, antique
cars, artwork, etc.

PHA Policy
In determining the value of non-necessary, non-financial personal property, the PHA will use the family’s estimate of the value. The PHA may obtain an appraisal if there is reason to believe that the family’s estimated value is off by $50 or more. The family must cooperate with the appraiser but cannot be charged any costs related to the appraisal.

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Unlimited copies may be made for internal use. Page 6B-39 Checking and Savings Accounts [Notice PIH 2023-27]
HUD considers bank accounts as non-necessary items of personal property. Whether or not non-necessary personal property is counted toward net family assets depends on the combined value of all of the family’s assets.
x When the combined value of net family assets is greater than the HUD-published threshold amount, which is adjusted annually and listed in HUD’s current year Inflation Adjusted Values tables ($50,000 for 2024, and $51,600 for 2025) $50,000, as adjusted by inflation, checking and/or savings accounts would be counted toward net family assets. x When the combined value of all non-necessary personal property does not exceed the HUDpublished threshold amount $50,000, as adjusted by inflation, all non-necessary personal property is excluded from net family assets. In this case, the value of the family’s checking and/or savings accounts would not be considered when calculating net family assets.

However, actual income from checking and savings accounts is always included in a family’s annual income, regardless of the total value of net family assets or whether the asset itself is included or excluded from net family assets, unless that income is specifically excluded.

ABLE Accounts [24 CFR 5.609(b)(10); Notice PIH 2019-09] An Achieving a Better Life Experience (ABLE) account is a type of tax-advantaged savings account that an eligible individual can use to pay for qualified disability expenses. Section 103 of the ABLE Act mandates that an individual’s ABLE account (specifically, its account balance, contributions to the account, and distributions from the account) is excluded when determining the designated beneficiary’s eligibility and continued occupancy under certain federal meanstested programs. The PHA must exclude the entire value of the individual’s ABLE account from the household’s assets. Distributions from the ABLE account are also not considered income.

However, all wage income received, regardless of which account the money is paid to, is included as income.

Investment Accounts Such as Stocks, Bonds, Saving Certificates, and Money Market Funds [24 CFR 5.603(b)(1)]
HUD considers financial investments such as stocks and bonds non-necessary items of personal property. Whether non-necessary personal property is counted toward net family assets depends on the combined value of all of the family’s assets. x When the combined value of net family assets is greater than the HUD-published threshold amount, which is adjusted annually and listed in HUD’s Inflation Adjusted Values tables ($50,000 for 2024, and $51,600 for 2025) $50,000, as adjusted by inflation, financial investments such as stocks and bonds are considered part of net family assets. In this case, the value of the family’s checking and/or savings accounts financial investments such as stocks and bonds would be counted toward net family assets. x When the combined value of all non-necessary personal property does not exceed the HUDpublished threshold amount$50,000, as adjusted by inflation, all non-necessary personal property is excluded from net family assets. In this case, the value of the family’s financial

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Unlimited copies may be made for internal use. Page 6B-40 investments such as stocks and bonds would not be considered when calculating net family assets.

However, actual income from financial accounts is always included in a family’s annual income, regardless of the total value of net family assets or whether the asset itself is included or excluded from net family assets, unless that income is specifically excluded. When a stock issues dividends in some years but not others (e.g., due to market performance), the dividend is counted as the actual return when it is issued, but when no dividend is issued, the actual return is $0. When the stock never issues dividends, the actual return is $0.

PHA Policy
In determining the market value of an investment account, the PHA will use the value of the account on the most recent investment report.

How anticipated income from an investment account will be calculated depends on whether the rate of return is known.

For assets that are held in an investment account with a known rate of return (e.g., savings certificates), asset income will be calculated based on that known rate (market value multiplied by rate of earnings).

When the anticipated rate of return is not known (e.g., stocks), the PHA will calculate asset income based on the earnings for the most recent reporting period.

Necessary and Non-Necessary Personal Property [24 CFR 5.603(b)(3)(i)] All assets are categorized as either real property (e.g., land, a home) or personal property.

Personal property includes tangible items, like boats, as well as intangible items, like bank accounts.

The value of necessary items of personal property is excluded from the calculation of net family assets. Necessary items of personal property include a car used for commuting or medical devices.

HUD defines necessary personal property as items essential to the family for the maintenance, use, and occupancy of the premises as a home; or they are necessary for employment, education, or health and wellness. Necessary personal property includes more than merely items that are indispensable to the bare existence of the family. It may include personal effects (such as items that are ordinarily worn or utilized by the individual), items that are convenient or useful to a reasonable existence, and items that support and facilitate daily life within the family’s home. Necessary personal property also includes items that assist a household member with a disability, including any items related to disability-related needs, or that may be required for a reasonable accommodation for a person with a disability. Necessary personal property does not include bank accounts, other financial investments, or luxury items. Items of personal property that do not qualify as necessary personal property are classified as non-necessary personal property.

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Unlimited copies may be made for internal use. Page 6B-41 The combined value of all non-necessary items of personal property is only included in annual income when the combined total value exceeds $50,000 (adjusted annually by HUD). When the combined value of all non-necessary personal property does not exceed $50,000, as adjusted by inflation, all non-necessary personal property is excluded from net family assets.

While not an exhaustive list, the following table from Notice PIH 2023-27 provides examples of necessary and non-necessary personal property.

Necessary Personal Property Non-Necessary Personal Property Car(s)/vehicle(s) that a family relies on for
transportation for personal or business use
(e.g., bike, motorcycle, skateboard, scooter)
Furniture, carpets, linens, kitchenware
Common appliances
Common electronics (e.g., radio, television,
DVD player, gaming system)
Clothing
Personal effects that are not luxury items
(e.g., toys, books)
Wedding and engagement rings
Jewelry used in religious/cultural
celebrations and ceremonies
Religious and cultural items
Medical equipment and supplies
Health care–related supplies
Musical instruments used by the family
Personal computers, phones, tablets, and
related equipment
Professional tools of trade of the family, for
example professional books
Educational materials and equipment used
by the family, including equipment to
accommodate persons with disabilities
Equipment used for exercising (e.g.,
treadmill, stationary bike, kayak,
paddleboard, ski equipment)
Recreational car/vehicle not needed for dayto-day transportation for personal or business use (campers, motorhomes,
traveling trailers, all-terrain vehicles (ATVs))
Bank accounts or other financial investments
(e.g., checking account, savings account,
stocks/bonds)
Recreational boat/watercraft
Expensive jewelry without religious or
cultural value, or which does not hold family
significance
Collectibles (e.g., coins/stamps)
Equipment/machinery that is not used to
generate income for a business
Items such as gems/precious metals, antique
cars, artwork, etc.

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Unlimited copies may be made for internal use. Page 6B-42 PHA Policy
In determining the value of personal property held as an investment, the PHA will use the family’s estimate of the value. The PHA may use other general practice methods to confirm the value of the asset if there is reason to believe that the family’s estimated value is off by $50 or more. In the event it is necessary to establish the value of personal property held for investment the family must cooperate with the appraiser, but cannot be charged any costs related to the appraisal.

Generally, personal property held as an investment generates no income until it is disposed of. If regular income is generated (e.g., income from renting the personal property), the amount that is expected to be earned in the coming year is counted as actual income from the asset.

Lump-Sum Additions to Net Family Assets [24 CFR 5.609(b)(24(viii); Notice PIH 2023-27] The regulations exclude income from lump-sum additions to family assets, including lottery or other contest winnings as a type of nonrecurring income.

In addition, lump sums from insurance payments, settlements for personal or property losses, and recoveries from civil actions or settlements based on claims of malpractice, negligence, or other breach of duty owed to a family member arising out of law that resulted in a member of the family becoming a family member with a disability are excluded from income.

Further, deferred periodic amounts from Supplemental Security Income (SSI) and Social Security benefits that are received in a lump sum amount or in prospective monthly amounts, or any deferred Department of Veterans Affairs disability benefits that are received in a lump sum amount or in prospective monthly amounts are also excluded from income.

However, these amounts may count toward net family assets. The PHA must consider any actual or imputed returns from assets as income at the next applicable income examination. In the case where the lump sum addition to assets would lead to imputed income, which is unearned income, that increases the family’s annual adjusted income by 10 percent or more, then the addition of the lump sum to the family’s assets will trigger an immediate interim reexamination of income in accordance with Chapter 11. This reexamination of income must take place as soon as the lump sum is added to the family’s net family assets unless the addition takes place in the last three months of family’s income certification period and the PHA chooses not to conduct the examination.

For a discussion of lump-sum payments that represent the delayed start of a periodic payment, most of which are counted as income, see sections 6-I.H and 6-I.I.

PHA Policy
Lump-sum payments are only counted as assets if they are retained by a family in a form recognizable as an asset. [RHIIP FAQs]. For example, if the family receives a $1,000 lump sum for lottery winnings, and the family immediately spends the entire amount, the lump sum will not be counted toward net family assets.

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Unlimited copies may be made for internal use. Page 6B-43 Jointly Owned Assets [Notice PIH 2023-27]
For assets owned jointly by the family and one or more individuals outside of the assisted family, the PHA must include the total value of the asset in the calculation of net family assets, unless:
x The asset is otherwise excluded;
x The family can demonstrate that the asset is inaccessible to them; or x The family cannot dispose of any portion of the asset without the consent of another owner who refuses to comply.

If the family demonstrates that they can only access a portion of an asset, then only that portion’s value is included in the calculation of net family assets for the family.

Any income from a jointly owned asset must be included in annual income, unless:
x The income is specifically excluded;
x The family demonstrates that they do not have access to the income from that asset; or x The family only has access to a portion of the income from that asset.

If the family demonstrates that they can only access a portion of the income from an asset, then only that portion’s value is included in the calculation of income from assets.

If an individual is a beneficiary who is entitled to access the account’s funds only upon the death of the account’s owner, and may not otherwise withdraw funds from an account, then the account is not an asset to the assisted family, and the family should provide proper documentation demonstrating that they are only a beneficiary on the account.

Trusts [24 CFR 5.609(b)(2) and 5.603(b)(4)]
A trust is a legal arrangement generally regulated by state law in which one party (the creator or grantor) transfers property to a second party (the trustee) who holds the property for the benefit of one or more third parties (the beneficiaries).

The following types of trust distributions are excluded from annual income:
x Distributions of the principal or corpus of the trust; and x Distributions of income from the trust when the distributions are used to pay the costs of health and medical care expenses for a minor.

The basis for determining how to treat trusts relies on information about who has access to either the principal in the account or the income from the account. There are two types of trusts, revocable and irrevocable.

When the creator sets up an irrevocable trust, the creator has no access to the funds in the account. Irrevocable trusts not under the control of any member of the family or household are not assets. Typically, special needs trusts are considered irrevocable. Irrevocable trusts not under the control of any member of the family are excluded from net family assets. The value

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Unlimited copies may be made for internal use. Page 6B-44 of the trust continues to be excluded from is not included in net family assets, so long as the fund continues to be held in a trust that is not revocable by, or under the control of, any member of the family or household [24 CFR 5.603(b)(4)]. Further, wWhere an irrevocable trust is excluded from net family assets, the PHA must not consider actual income earned by the trust (e.g., interest earned, rental income if property is held in the trust) for so long as the income from the trust is not distributed. If the value of the trust is not considered part of the family’s net assets, then distributions from the trust are treated as follows:

All distributions from the trust’s principal are excluded from income.

Distributions of income earned by the trust (i.e., interest, dividends, realized gains, or other earnings on the trust’s principal), are included as income unless the distribution is used to pay for the health and medical expenses for a minor.

A revocable trust is a trust that the creator of the trust may amend or end (revoke). When there is a revocable trust, the creator has access to the funds in the trust account.

A revocable trust that is under the control of the family is included in net family assets when the grantor is a member of the assisted family. If a revocable trust is included in the calculation of net family assets, then the actual income earned by the revocable trust is also included in the family’s income. For example, interest earned or rental income if the property is held in the trust. The PHA must calculate imputed income on the revocable trust if net family assets are more than the HUD-published threshold amount, which is adjusted annually and listed in HUD’s Inflation Adjusted Values tables ($50,000 for 2024, and $51,600 for 2025), and actual income from the trust cannot be calculated (e.g., if the trust is comprised of farmland that is not in use). x A The value of revocable trusts that isare not under the control of the family are excluded from net family assets. This happens when a member of the assisted family is the beneficiary of a revocable trust, but the grantor is not a member of the assisted family. In this case the beneficiary does not “own” the revocable trust, and the value of the trust is excluded from net family assets. For the revocable trust to be considered excluded from net family assets, no family or household member may be the account’s trustee.

For both irrevocable and revocable trusts, if the value of the trust is not considered part of net family assetsIf this is the case, then distributions from the trust are treated as follows:
x All distributions from the trust’s principal are excluded from income. x Distributions of income earned by the trust (i.e., interest, dividends, realized gains, or other earnings on the trust’s principal), are included as income unless the distribution is used to pay for the health and medical expenses for a minor.

Revocable trusts under the control of the family or household (e.g., the grantor is a member of the assisted family or household) are considered assets and must be included in net family assets.

If the value of the trust is considered part of the family’s net assets, then distributions from the trust are not considered income to the family. The PHA must count all actual returns (e.g., interest earned) from the trust as income or, if the trust has no actual returns (e.g., if the trust is comprised of farmland that is not in use) and the total value of the combined net family

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Unlimited copies may be made for internal use. Page 6B-45 assets exceeds $50,000 (as that amount is updated for inflation), as imputed returns, as applicable.

Life Insurance [FR Notice 2/14/23 and Notice PIH 2023-27] Net family assets do not include the value of term life insurance, which has no cash value to the individual before death.

The cash value of a life insurance policy available to a family member before death, such as a whole life or universal life policy, is included in the calculation of the value of the family’s assets. The cash value is the surrender value. While the cash value of an insurance policy is considered an asset, the face value of any policy is not. If such a policy earns dividends or interest that the family could elect to receive, the amount of dividends or interest is counted as income from the asset whether or not the family actually receives it.

Tax Refunds [24 CFR 5.603(b)(3)(xi) and Notice PIH 2023-27] All amounts received by a family in the form of federal tax refunds or refundable tax credits are excluded from a family’s net family assets for a period of 12 months after receipt by the family.

At the time of an annual or interim reexamination of income, if the federal tax refund was received during the 12 months preceding the effective date of the reexamination, then the amount of the refund that was received by the family is subtracted from the total value of the account in which the federal tax refund or refundable tax credits were deposited net family assets. When the subtraction results in a negative number, then the balance of the asset is net family assets are considered $0.

If the tax refund or refundable tax credit is deposited into another excluded asset, such as a retirement account or a Coverdell Education Savings Account, then the deposit will have no effect on the balance of the asset (i.e., there is no need for the PHA to subtract the amount of the deposit from the value of the excluded asset).

Asset Exclusions [24 CFR 5.603(b)]
The following are excluded from the calculations of net family assets:
x The value of any account under a retirement plan recognized as such by the IRS, including individual retirement arrangements (IRAs), employer retirement plans, and retirement plans for self-employed individuals [24 CFR 5.603(b)(3)(iii)]. x The value of real property that the family does not have the effective legal authority to sell in the jurisdiction in which the property is located [24 CFR 5.603(b)(3)(iv)]. - Real property as used in this part has the same meaning as that provided under the law of the state in which the property is located [24 CFR 5.100]. - Examples of this include but are not limited to co-ownership situations (including situations where one owner is a victim of domestic violence), where one party cannot unilaterally sell the real property; property that is tied up in litigation; and inherited property in dispute [Notice PIH 2023-27].

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Unlimited copies may be made for internal use. Page 6B-46 x Any amounts recovered in any civil action or settlement based on a claim of malpractice, negligence, or other breach of duty owed to a family member arising out of law, that resulted in a family member being a person with a disability [24 CFR 5.603(b)(3)(v)]; x The value of any Coverdell education savings account under section 530 of the Internal Revenue Code of 1986 [24 CFR 5.603(b)(3)(vi)];
x The value of any qualified tuition program under Section 529 of such Code [24 CFR

5.603(b)(3)(vi)];
x The value of any “baby bond” account created, authorized, or funded by federal, state, or local government [24 CFR 5.603(b)(3)(vi)];
x Interests in Indian trust land [24 CFR 5.603(b)(3)(vii)]; x Equity in a manufactured home where the family receives assistance under 24 CFR part 982 [24 CFR 5.603(b)(3)(viii)];
x Equity in property under the Homeownership Option for which a family receives assistance under 24 CFR part 982 [24 CFR 5.603(b)(3)(ix)];
x Family Self-Sufficiency accounts [24 CFR 5.603(b)(3)(x)]; x Federal tax refunds or refundable tax credits for a period of 12 months after receipt by the family [24 CFR 5.603(b)(3)(xi)].
x The full amount of assets held in an irrevocable trust [Notice PIH 2023-27]; and x The full amount of assets held in a revocable trust where a member of the family is the beneficiary, but the grantor/owner and trustee of the trust is not a member of the participant family or household [Notice PIH 2023-27].
6B-II.D. DETERMINING INCOME FROM ASSETS
In some cases, amounts that are excluded from net family assets may be included as annual income when disbursements are made to a family from an asset. In other cases, amounts are excluded from annual income as a lump-sum addition to net family assets, but those funds are then considered a net family asset if held in an account or other investment that is considered part of net family assets [Notice PIH 2023-27].

Net Family Assets
Net family assets are defined as the net cash value of all assets owned by the family, after deducting reasonable costs that would be incurred in disposing real property, savings, stocks, bonds, and other forms of capital investment.

PHA Policy
Reasonable costs that would be incurred when disposing of an asset include, but are not limited to, penalties for premature withdrawal, broker and legal fees, and settlement costs incurred in real estate transactions such as settlement costs and transfer taxes [New PH OCC GB, Income Determinations, p. 24].

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Unlimited copies may be made for internal use. Page 6B-47 The calculation of asset income sometimes requires the PHA to make a distinction between an asset’s market value and its cash value.
x The market value of an asset is its worth in the market (e.g., the amount a buyer would pay for real estate or the total value of an investment account). x The cash value of an asset is its market value less all reasonable amounts that would be incurred when converting the asset to cash.

The cash value of real property or other assets with negative equity would be considered $0 for the purposes of calculating net family assets. Negative equity in real property or other investments does not prohibit the family from selling the property or other investments, so negative equity alone would not justify excluding the property or other investments from family assets [Notice PIH 2023-27].

Actual Income from Assets
Income from assets must be included on the Form HUD-50058 regardless of the amount of income. Actual income from assets is always included in a family’s annual income, regardless of the total value of net family assets or whether the asset itself is included or excluded from net family assets, unless that income is specifically excluded by 24 CFR 5.609(b).

Income or returns from assets are generally considered to be interest, dividend payments, and other actual income earned on the asset, and not the increase in market value of the asset. The increase in market value is relevant to the cash value of the asset for the purpose of determining total net family assets and imputing income.

The PHA may determine the net assets of a family based on a self-certification by the family that the net family assets do not exceed the HUD-published threshold amount, which is adjusted annually and listed in HUD’s Inflation Adjusted Values tables$50,000 (adjusted annually by HUD), without taking additional steps to verify the accuracy of the declaration [24 CFR 5.618(b)]. Policies related to verification of assets are found in Chapter 7 of this policy. x The threshold amount is $50,000 for 2024, and $51,600 for 2025.

The PHA may not calculate or include any imputed income from assets when net family assets total $50,000 or less than or equal to the HUD-published threshold amount [24 CFR

5.609(b)(1)]. The actual income from assets must be included on the Form HUD-50058.

Imputed Income from Assets
When net family assets exceed the HUD-published threshold amount, which is adjusted annually and listed in HUD’s Inflation Adjusted Values tables $50,000 (adjusted annually by HUD), the PHA may not rely on self-certification. If actual returns can be calculated, the PHA must include actual income from the asset on the Form HUD-50058 (for example, a savings account or CD where the rate of return is known). If actual returns cannot be calculated, the PHA must calculate imputed returns using the HUD-determined passbook rate (for example, real property or a non-necessary item of personal property such as a recreational boat).

Imputed income is calculated by multiplying the net cash value of the asset, after deducting reasonable costs that would be incurred in disposing of the asset, by the HUD-published

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An asset with an actual return of $0 (such as a non-interest-bearing checking account), is not the same as an asset for which an actual return cannot be computed (such as non-necessary personal property). If the asset is a financial asset and there is no income generated (for example, a bank account with a zero percent interest rate or a stock that does not issue cash dividends), then the asset generates zero actual asset income, and imputed income is not calculated. When a stock issues dividends in some years but not others (e.g., due to market performance), the dividend is counted as the actual return when it is issued, and when no dividend is issued, the actual return is $0. When the stock never issues dividends, the actual return is consistently $0.

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Unlimited copies may be made for internal use. Page 6B-49 PART III: ADJUSTED INCOME
6B-III.A. OVERVIEW
HUD regulations require PHAs to deduct from annual income any of five mandatory deductions for which a family qualifies and allow the PHA to deduct other permissive deductions in accordance with PHA policy. The resulting amount is the family’s adjusted income. Mandatory deductions are found in 24 CFR 5.611.

5.611 Adjusted income ŵĞĂŶƐĂŶŶƵĂůŝŶĐŽŵĞ;ĂƐĚĞƚĞƌŵŝŶĞĚƵŶĚĞƌΑരϱ͘ϲϬϵͿŽĨƚŚĞŵĞŵďĞƌƐŽĨ the family residing or intending to reside in the dwelling unit, after making the following deductions:
(a) Mandatory deductions
(1) $480 for each dependent (adjusted annually by HUD, rounded to the next lowest multiple of $25);
(2) $525 for any elderly family or disabled family (adjusted annually by HUD, rounded to the next lowest multiple of $25);
(3) The sum of the following, to the extent the sum exceeds ten percent of annual income:
(i) Unreimbursed health and medical care expenses of any elderly family or disabled family; (ii) Unreimbursed reasonable attendant care and auxiliary apparatus expenses for each member of the family who is a person with disabilities, to the extent necessary to enable any member of the family (including the member who is a person with disabilities) to be employed; and
(4) Any reasonable child care expenses necessary to enable a member of the family to be employed or to further his or her education.

This part covers policies related to these mandatory deductions. Verification requirements related to these deductions are found in Chapter 7.

Anticipating Expenses
PHA Policy
Generally, the PHA will use current circumstances to anticipate expenses. When possible, for costs that are expected to fluctuate during the year (e.g., child care during school and non-school periods and cyclical medical expenses), the PHA will estimate costs based on historic data and known future costs.

If a family has an accumulated debt for medical or disability assistance expenses, the PHA will include as an eligible expense the portion of the debt that the family expects to pay during the period for which the income determination is being made. However, amounts previously deducted will not be allowed even if the amounts were not paid as expected in a preceding period. The PHA may require the family to provide documentation of payments made in the preceding year.

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Unlimited copies may be made for internal use. Page 6B-50 When calculating health and medical care expenses, the PHA will include those expenses anticipated to be incurred during the 12 months following the certification date which are not covered by an outside source, such as insurance. The allowance is not intended to give a family an allowance equal to last year’s expenses, but to anticipate regular ongoing and anticipated expenses during the coming year. Since these expenses are anticipated, the PH Occupancy Guidebook states “it is likely that actual expenses will not match what was anticipated. Typically, this would not be considered an underpayment as long as at the time of the annual reexamination, the expenses were calculated based on the appropriate verification” [New PH OCC GB, Income Determinations, p. 30]. For annual reexaminations, the PHA will use information for the previous 12-month period.
6B-III.B. DEPENDENT DEDUCTION
An allowance of $480 is deducted from annual income for each dependent (which amount will be adjusted by HUD annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, rounded to the next lowest multiple of $25) [24 CFR 5.611(a)(1)].

Dependent is defined as any family member other than the head, spouse, or cohead who is under the age of 18 or who is 18 or older and is a person with disabilities or a full-time student.

Foster children, foster adults, and live-in aides are never considered dependents [24 CFR 5.603(b)].
6B-III.C. ELDERLY OR DISABLED FAMILY DEDUCTION
A single deduction of $525 is taken for any elderly or disabled family (which amount will be adjusted by HUD annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, rounded to the next lowest multiple of $25) [24 CFR 5.611(a)(2)].

An elderly family is a family whose head, spouse, cohead, or sole member is 62 years of age or older, and a disabled family is a family whose head, spouse, cohead, or sole member is a person with disabilities [24 CFR 5.403].

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Unlimited copies may be made for internal use. Page 6B-51 6B-III.D. HEALTH AND MEDICAL CARE EXPENSES DEDUCTION [24 CFR 5.611(A)(3)(I) AND

5.603(B)]
Unreimbursed health and medical care expenses may be deducted to the extent that, in combination with any disability assistance expenses, they exceed ten percent of annual income.

This deduction is permitted only for families in which the head, spouse, or cohead is at least 62 or is a person with disabilities. If a family is eligible for a health and medical care expense deduction, the unreimbursed health and medical care expenses of all family members are countedincluded. The PHA calculates health and medical care expenses based on the family’s past expenses, but accounting for any anticipated changes in expenses during the certification period.

Definition of Medical Expenses
HUD regulations define health and medical care expenses at 24 CFR 5.603(b) to mean “any costs incurred in the diagnosis, cure, mitigation, treatment, or prevention of disease or payments for treatments affecting any structure or function of the body. Health and medical care expenses include medical insurance premiums and long-term care premiums that are paid or anticipated during the period for which annual income is computed.” Medical insurance premiums continue to be eligible health and medical care expenses. Health and medical care expenses may be deducted from annual income only if they are eligible under this definition and not otherwise reimbursed and may only be deducted for elderly or disabled families.

Although HUD revised the definition of health and medical care expenses to reflect the Internal Revenue Service (IRS) general definition of medical expenses, HUD is not permitting PHAs to specifically align their policies with IRS Publication 502 for determining which expenses are included in HUD’s mandatory deduction for health and medical care expenses. PHAs must review each expense to determine whether it is eligible in accordance with HUD’s definition of health and medical care expenses.

While PHA policies may not specifically align with IRS Publication 502, HUD recommends PHAs use it as a standard for determining allowable expenses, and the PHA may list examples of allowable expenses in their policy provided they comply with HUD’s definition at 24 CFR 5.603.

The PHA may not define health and medical care expenses more narrowly than the regulation.

PHA Policy
The PHA will use the most current IRS Publication 502 as a standard for determining if expenses claimed by eligible families qualify as health and medical care expenses.

However, under no circumstances will the PHA deduct any expenses listed in IRS Publication 502 that do not conform with HUD’s definition of health and medical care expenses.

Summary of Typical Allowable Health and Medical Care Expenses Services of medical professionals Substance abuse treatment programs

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Unlimited copies may be made for internal use. Page 6B-52 Surgery and medical procedures that are
necessary, legal, and non-cosmetic
Services of medical facilities
Hospitalization, long-term care, and inhome nursing services Prescription medicines and insulin, but
not nonprescription medicines even if
recommended by a doctor
Improvements to housing directly
related to medical needs (e.g., ramps for
a wheelchair, handrails)
Medical insurance premiums or the cost
of a health maintenance organization
(HMO)
Medicare Part B and Part D premiums
Psychiatric treatment
Ambulance services and some costs of
transportation related to medical
expenses. The PHA will use the most
current medical mileage rate listed in
IRS Publication 502.

The cost and care of necessary
equipment related to a medical
condition (e.g., eyeglasses/lenses,
hearing aids, crutches, and artificial
teeth)
The costs of buying, training, and
maintaining a guide dog or other
service animal to assist a visually
impaired or hearing disabled person, or
a person with other physical disabilities.

In general, this includes any costs, such
as food, grooming, and veterinary care,
incurred in maintaining the health and
vitality of the service animal so that it
may perform its duties.

Note: This chart provides a summary of eligible health and medical care expenses only. In all cases, the PHA will consider whether health and medical expenses care expenses claimed by the family are eligible under HUD’s definition.

Families That Qualify for Both Health and Medical and Disability Assistance Expenses PHA Policy
This policy applies only to families in which the head, spouse, or cohead is 62 or older or is a person with disabilities.

When expenses anticipated by a family could be defined as either medical or disability assistance expenses, the PHA will consider them medical expenses unless it is clear that the expenses are incurred exclusively to enable a person with disabilities to work.

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Unlimited copies may be made for internal use. Page 6B-53 6B-III.E. DISABILITY ASSISTANCE EXPENSES DEDUCTION [24 CFR 5.603(B) AND 24 CFR 5.611(A)(3)(II)]
Unreimbursed reasonable expenses for attendant care and auxiliary apparatus for each member of the family who is a person with disabilities may be deducted if they: (1) are necessary to enable a family member 18 years or older to work, (2) are not paid to a family member or reimbursed by an outside source, (3) in combination with any medical expenses, exceed ten percent of annual income, and (4) do not exceed the earned income received by the family member who is enabled to work.

Earned Income Limit on the Disability Assistance Expense Deduction A family can qualify for the disability assistance expense deduction only if at least one family member (who may be the person with disabilities) is enabled to work [24 CFR 5.603(b)].

The disability expense deduction is capped by the amount of “earned income received by family members who are 18 years of age or older and who are able to work” because of the expense [24 CFR 5.611(a)(3)(ii)]. The earned income used for this purpose is the amount verified before any earned income disallowances or income exclusions are applied.

PHA Policy
The family must identify the family members enabled to work as a result of the disability assistance expenses. In evaluating the family’s request, the PHA will consider factors such as how the work schedule of the relevant family members relates to the hours of care provided, the time required for transportation, the relationship of the family members to the person with disabilities, and any special needs of the person with disabilities that might determine which family members are enabled to work.

When the PHA determines that the disability assistance expenses enable more than one family member to work, the expenses will be capped by the sum of the family members’ incomes.

Eligible Auxiliary Apparatus [Notice PIH 2023-27]
Auxiliary apparatus items may include expenses for wheelchairs, ramps, adaptations to vehicles, guide dogs, assistance animals, or special equipment to enable a person who is blind or has low vision to read or type or special equipment to assist a person who is deaf or hard of hearing.

Eligible Attendant Care [Notice PIH 2023-27]
Examples of attendant care expenses can include teaching a person with disabilities how to perform day-to-day tasks independently like cleaning, bathing, doing laundry, and cooking.

Attendant care can be 24-hour care, or care during sporadic periods throughout the day. The family determines the type of attendant care that is appropriate for the person with disabilities.

PHA Policy

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Unlimited copies may be made for internal use. Page 6B-54 Attendant care expenses will be included for the period that the person enabled to work is employed plus reasonable transportation time. The cost of general housekeeping and personal services is not an eligible attendant care expense. However, if the person enabled to work is the person with disabilities, personal services necessary to enable the person with disabilities to work are eligible.

If the care attendant also provides other services to the family, the PHA will prorate the cost and allow only that portion of the expenses attributable to attendant care that enables a family member to work. For example, if the care provider also cares for a child who is not the person with disabilities, the cost of care must be prorated. Unless otherwise specified by the care provider, the calculation will be based upon the number of hours spent in each activity and/or the number of persons under care.

Payments to Family Members
No disability assistance expenses may be deducted for payments to a member of an assisted family [24 CFR 5.603(b)]. However, expenses paid to a relative who is not a member of the assisted family may be deducted if they are not reimbursed by an outside source.

Necessary and Reasonable Expenses
The family determines the type of care or auxiliary apparatus to be provided and must describe how the expenses enable a family member to work. The family must certify that the disability assistance expenses are necessary and are not paid or reimbursed by any other source.

PHA Policy
The PHA determines the reasonableness of the expenses based on typical costs of care or apparatus in the locality. To establish typical costs, the PHA will collect information from organizations that provide services and support to persons with disabilities. A family may present, and the PHA will consider, the family’s justification for costs that exceed typical costs in the area.

Families That Qualify for Both Health and Medical and Disability Assistance Expenses PHA Policy
This policy applies only to families in which the head or spouse is 62 or older or is a person with disabilities.

When expenses anticipated by a family could be defined as either health and medical care or disability assistance expenses, the PHA will consider them health and medical care expenses unless it is clear that the expenses are incurred exclusively to enable a person with disabilities to work.

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Unlimited copies may be made for internal use. Page 6B-55 6B-III.F. CHILD CARE EXPENSE DEDUCTION
HUD defines child care expenses at 24 CFR 5.603(b) as “amounts anticipated to be paid by the family for the care of children under 13 years of age (age 12 and younger) (including foster children) during the period for which annual income is computed, but only where such care is necessary to enable a family member to actively seek employment, be gainfully employed, or to further his or her education and only to the extent such amounts are not reimbursed. The amount deducted shall reflect reasonable charges for child care. In the case of child care necessary to permit employment, the amount deducted shall not exceed the amount of employment income that is included in annual income.”
Clarifying the Meaning of Child for This Deduction
Child care expenses do not include child support payments made to another on behalf of a minor who is not living in an assisted family’s household [VG, p. 26]. However, child care expenses for foster children that are living in the assisted family’s household are included when determining the family’s child care expenses [HCV GB, p. 5-29].

Qualifying for the Deduction
Determining Who Is Enabled to Pursue an Eligible Activity PHA Policy
The family must identify the family member(s) enabled to pursue an eligible activity. The term eligible activity in this section means any of the activities that may make the family eligible for a child care deduction (seeking work, pursuing an education, or being gainfully employed).

In evaluating the family’s request, the PHA will consider factors such as how the schedule for the claimed activity relates to the hours of care provided, the time required for transportation, the relationship of the family member(s) to the child, and any special needs of the child that might help determine which family member is enabled to pursue an eligible activity.

Seeking Work
PHA Policy
If the child care expense being claimed is to enable a family member to seek employment, the family must provide evidence of the family member’s efforts to obtain employment at each reexamination on a PHA proof of seeking work form. The deduction may be reduced or denied if the family member’s job search efforts are not commensurate with the child care expense being allowed by the PHA.

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PHA Policy
If the child care expense being claimed is to enable a family member to further their education, the member must be enrolled in school (academic or vocational) or participating in a formal training program. The family member is not required to be a full-time student, but the time spent in educational activities must be commensurate with the child care claimed.

Being Gainfully Employed
PHA Policy
If the child care expense being claimed is to enable a family member to be gainfully employed, the family must provide evidence of the family member’s employment during the time that child care is being provided. Gainful employment is any legal work activity (full- or part-time) for which a family member is compensated.

Earned Income Limit on Childc Care Expense Deduction
When a family member looks for work or furthers their education, there is no cap on the amount that may be deducted for child care – although the care must still be necessary and reasonable. However, when child care enables a family member to work, the deduction is capped by “the amount of employment income that is included in annual income” [24 CFR

5.603(b)].

The earned income used for this purpose is the amount of earned income verified after any earned income disallowances or income exclusions are applied.

When the person who is enabled to work is a person with disabilities who receives the earned income disallowance (EID) or a full-time student whose earned income above $480 is excluded, child care costs related to enabling a family member to work may not exceed the portion of the person’s earned income that actually is included in annual income. For example, if a family member who qualifies for the EID makes $15,000 but because of the EID only $5,000 is included in annual income, child care expenses are limited to $5,000.

The PHA must not limit the deduction to the least expensive type of child care. If the care allows the family to pursue more than one eligible activity, including work, the cap is calculated in proportion to the amount of time spent working [HCV GB, p. 5-30].

PHA Policy
When the child care expense being claimed is to enable a family member to work, only one family member’s income will be considered for a given period of time. When more than one family member works during a given period, the PHA generally will limit allowable child care expenses to the earned income of the lowest-paid member. The

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Unlimited copies may be made for internal use. Page 6B-57 family may provide information that supports a request to designate another family member as the person enabled to work.

Eligible Childc Care Expenses
The type of care to be provided is determined by the assisted family. The PHA may not refuse to give a family the child care expense deduction because there is an adult family member in the household that may be available to provide child care [VG, p. 26].

Allowable Childc Care Activities
PHA Policy
For school-age children, costs attributable to public or private school activities during standard school hours are not considered. Expenses incurred for supervised activities after school or during school holidays (e.g., summer day camp, after-school sports league) are allowable forms of child care.

The costs of general housekeeping and personal services are not eligible. Likewise, child care expenses paid to a family member who lives in the family’s unit are not eligible; however, payments for child care to relatives who do not live in the unit are eligible.

If a child care provider also renders other services to a family or child care is used to enable a family member to conduct activities that are not eligible for consideration, the PHA will prorate the costs and allow only that portion of the expenses that is attributable to child care for eligible activities. Unless otherwise specified by the child care provider, the calculation will be based upon the number of hours spent in each activity and/or the number of persons under care.

Necessary and Reasonable Costs
Child care expenses will be considered necessary if: (1) a family adequately explains how the care enables a family member to work, actively seek employment, or further their education, and (2) the family certifies, and the child care provider verifies, that the expenses are not paid or reimbursed by any other source.

PHA Policy
Child care expenses will be considered for the time required for the eligible activity plus reasonable transportation time. For child care that enables a family member to go to school, the time allowed may include not more than one half study hour for each hour spent in class.

To establish the reasonableness of child care costs, the PHA will use the schedule of child care costs from a qualified local entity that either subsidizes child care costs or licenses child care providers. Families may present, and the PHA will consider, justification for costs that exceed typical costs in the area.

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Unlimited copies may be made for internal use. Page 6B-58 6B-III.G. HARDSHIP EXEMPTIONS [24 CFR 5.611(C), (D), AND (E)] Health and Medical Care and Disability Assistance Expenses [24 CFR 5.611(c); Notice PIH 2023-27]
The regulations provide for two types of hardship exemption categories for families that qualify for unreimbursed health and medical care expenses and/or disability assistance expenses. A family will benefit from this hardship exemption only if the family has eligible expenses that can be deducted in excess of five percent of annual income. In order to claim unreimbursed health and medical care expenses, the family must have a head, cohead, or spouse that is elderly or a person with a disability. In order to claim unreimbursed reasonable attendant care and auxiliary apparatus expenses, the family must include a person with a disability, and the expenses must enable any member of the family (including the member who is a person with a disability) to be employed.

Families may be eligible for relief under one of two categories; phased-in relief or general relief, as defined below.

Phased-In Relief
The first category is applicable to all families who received a deduction for unreimbursed health and medical care and/or reasonable attendant care or auxiliary apparatus expenses based on their most recent income review prior to January 1, 2024. The family must receive phased-in relief if they are determined to be eligible. These families will begin receiving a 24-month phased-in relief at their next annual or interim reexamination, whichever occurs first, after the date on which the PHA implements phased-in relief.

For these families, the threshold amount is phased-in as follows:
x The family is eligible for a deduction totaling the sum of expenses that exceeds 5 percent of annual income for the first 12 months.
x At the conclusion of 12 months, the family is eligible for a deduction totaling the sum of their expenses that exceed 7.5 percent of annual income for another 12 months. x At the conclusion of 24 months, the standard threshold amount of 10 percent would be used, unless the family qualifies for relief under the general hardship relief category. - When an eligible family’s phased-in relief begins at an interim reexamination, the PHA will need tomust process another transaction (either an interim reexamination or non-interim transaction, as applicable) one year later to move the family along to the next phase. The transaction can be either an interim reexamination if triggered, or a non-interim reexamination transaction.

Prior to the end of the 24-month period, the family may request a hardship exemption under the second category as described below. If the family is found eligible under the second category, the hardship exemption under the first category ends, and the family’s hardship is administered in accordance with the requirements listed below. Once a family requests general relief, the family may no longer receive phased-in relief.

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Unlimited copies may be made for internal use. Page 6B-59 PHAs must track the 24-month phase-period for each eligible family, even if a family’s expenses go below the appropriate phase-in percentage, during the first or second 12-month phase-in period. The phase-in must continue for families who move to another public housing unit at the same PHA. When the family is treated as a new admission under a different property/program (e.g., the family moves from public housing to the HCV program), unless the PHA has a written policy to continue the phased-in relief upon admission, the family’s expense deduction will be calculated using the 10-percent threshold unless request for general relief is approved by the PHA. When a family moves with continued assistance or ports to a new PHA, the family must continue to receive the phased-in relief. The family must receive the remaining calendar months of the percentage phase-in. The PHA must use the existing phase-in documentation to determine the remaining calendar months and the percentage phase-in.

General Relief
The second category is for families that can demonstrate:
x Their health and medical and/or disability assistance expenses increased (other than the transition to the higher threshold); or
x The family’s financial hardship is a result of a change in circumstances (as defined in PHA policy) that would not otherwise trigger an interim reexamination.

The family may request a hardship exemption under the second category regardless of whether the family previously received the health and medical and/or disability assistance deductions or are currently or were previously receiving relief under the phased-in relief category above. HUD requires that PHAs develop policies defining what constitutes a hardship for purposes of this exemption.

The PHA must obtain third-party verification of the hardship or must document in the file the reason third-party verification was not available. PHAs must attempt to obtain third-party verification prior to the end of the 90-day hardship exemption period.

PHA Policy
To qualify for a hardship exemption, a family must submit a request in writing. The request must show that the family’s health and medical and/or disability assistance expenses have increased (other than the transition to the higher threshold) and that the family’s financial hardship is a result of a change in circumstances. The PHA defines a change in circumstances as a decrease in income or increase in other expenses that has resulted in the family’s financial hardship but does not, on its own, trigger an interim reexamination in accordance with PHA policies.

Examples of circumstances constituting a financial hardship may include the following situations:

The family is awaiting an eligibility determination for a federal, state, or local assistance program, such as a determination for unemployment compensation or disability benefits;

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Unlimited copies may be made for internal use. Page 6B-60 The family’s income decreased because of a loss of employment, death of a family member, or due to a natural or federal/state declared disaster; or Other circumstances as determined by the PHA.

The family must provide third-party verification of the hardship with the request. If third-party verification is not available, the PHA will document the file with the reason and will attempt to obtain third-party verification prior to the end of the 90-day hardship exemption period.

The PHA must promptly notify the family in writing of the change in the determination of adjusted income and the family’s rent resulting from hardship exemptions. The notice must inform the family of when the hardship exemption will begin and expire [24 CFR 5.611(e)(2)].

PHA Policy
The PHA will make a determination of whether the family qualifies for a hardship exemption within 30 calendar days and will notify the family in writing of the result within 10 business days of the determination.

If the PHA denies the hardship exemption request, the PHA notice will also state that if the family does not agree with the PHA determination, the family may request an informal hearing. If the family qualifies for an exemption, the PHA will include the date the hardship exemption will begin and the date it will expire as well as information on how to request a 90-day extension based on family circumstances.

If the family qualifies, the family will receive a deduction for the sum of eligible expenses that exceed five percent of annual income.

The family’s hardship relief ends when the circumstances that made the family eligible for the relief are no longer applicable or after 90 days, whichever is earlier. However, the PHA may, at its discretion, extend the relief for one or more additional 90-day periods while the family’s hardship condition continues. PHAs are not limited to a maximum number of 90-day extensions.

PHAs must establish written policies regarding the types of circumstances that will allow a family to qualify for a financial hardship and when such deductions may be eligible for additional 90-day extensions. PHAs must develop policies requiring families to report if the circumstances that made the family eligible for the hardship exemption are no longer applicable.

PHA Policy
The family may request an extension either orally or in writing prior to the end of the hardship exemption period. The PHA will automatically extend relief for an additional 90-days if the family request an extension from the PHA and the family’s circumstances that resulted in the hardship haven’t changed.

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Unlimited copies may be made for internal use. Page 6B-61 In all other instances, the PHA will extend relief for an additional 90-days if the family demonstrates to the PHA’s satisfaction that the family continues to qualify for the hardship exemption based on circumstances described above. The PHA may require updated verification based on the family’s current circumstances. Additional extension(s) may be granted on a case-by-case basis provided the family continues to request extensions prior to the end of each hardship exemption period. Families must report if the circumstances that made the family eligible for the hardship exemption are no longer applicable. At any time, the PHA may terminate the hardship exemption if the PHA determines that the family no longer qualifies for the exemption.

Childc Care Expense Hardship Exemption [24 CFR 5.611(d) and Notice PIH 2023-27] A family whose eligibility for the child care expense deduction is ending may request a financial hardship exemption to continue receiving the deduction. If the family demonstrates to the PHA’s satisfaction that the family is unable to pay their rent because of the loss of the child care expense deduction, and that the child care expense is still necessary even though the family member is not working, looking for work, or seeking to further their education, the PHA must recalculate the family’s adjusted income and continue the child care deduction.

The PHA must develop a policy to define what constitutes a hardship, which includes the family’s inability to pay rent. The PHA must obtain third-party verification of the hardship or must document in the file the reason third-party verification was not available. PHAs must attempt to obtain third-party verification prior to the end of the 90-day hardship exemption period.

PHA Policy
For a family to qualify for the hardship, they must demonstrate that their inability to pay rent would be a result of the loss of this deduction. The PHA defines this hardship as a potential decrease in income or increase in other expenses that would result from the loss of the child care expense and such loss would impact the family’s ability to pay their rent.

Some factors to consider when determining if the family is unable to pay rent may include determining that the rent, utility payment, and applicable expenses (child care expenses or health and medical expenses) are more than 40 percent of the family’s adjusted income, or verifying whether the family has experienced unanticipated expenses, such as large medical bills, that have affected their ability to pay their rent.

The family must also demonstrate that the child care expense is still necessary even though the family member is no longer employed or furthering their education. The PHA will consider qualification under this criterion on a case-by case basis (for example, if the family member who was employed has left their job in order to provide uncompensated care to an elderly friend or family member who is severely ill and lives across town).

The family must provide third-party verification of the hardship with the request. If third-party verification is not available, the PHA will document the file with the reason

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Unlimited copies may be made for internal use. Page 6B-62 and will attempt to obtain third-party verification prior to the end of the 90-day hardship exemption period.

The PHA must promptly notify the family in writing of the change in the determination of adjusted income and the family’s rent resulting from hardship exemptions.

If the PHA denies the request, the notice must specifically state the reason for the denial. PHAs must provide families 30 days’ notice of any increase in rent.

If the PHA approves the request, the notice must inform the family of when the hardship exemption will begin and expire [24 CFR 5.611(e)(2)]. The notice must also state the requirement for the family to report to the PHA if the circumstances that made the family eligible for relief are no longer applicable and that the family’s adjusted income and tenant rent will be recalculated upon expiration of the hardship exemption [Notice PIH 2023-27].

PHA Policy
The PHA will make a determination of whether the family qualifies within 30 calendar days and will notify the family in writing of the result within 10 business days of the determination.

If the PHA denies the hardship exemption request, the PHA notice will also state that if the family does not agree with the PHA determination, the family may request an informal grievance hearing.

If the family qualifies for an exemption, the PHA will include all required information listed above as well as information on how to request a 90-day extension based on family circumstances.

If the family qualifies, the hardship exemption and the resulting alternative adjusted income calculation must remain in place for a period of up to 90 days.

The PHA may, at its discretion, extend the hardship exemptions for additional 90-day periods based on family circumstances and as stated in PHA policies. PHAs are not limited to a maximum number of 90-day extensions. PHAs must develop policies requiring families to report if the circumstances that made the family eligible for the hardship exemption are no longer applicable.

PHAs must promptly notify families in writing if they are denied either an initial hardship exemption or an additional 90-day extension of the exemption. If the PHA denies the request, the notice must specifically state the reason for the denial.

PHAs must notify the family if the hardship exemption is no longer necessary and the hardship exemption will be terminated because the circumstances that made the family eligible for the exemption are no longer applicable. The notice must state the termination date and provide 30 days’ notice of rent increase, if applicable.

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Unlimited copies may be made for internal use. Page 6B-63 PHA Policy
The family may request an extension either orally or in writing prior to the end of the hardship exemption period. The PHA will automatically extend relief for an additional 90-days if the family request an extension from the PHA and the family’s circumstances that resulted in the hardship haven’t changed.

In all other instances, the PHA will extend relief for an additional 90-days if the family demonstrates to the PHA’s satisfaction that the family continues to qualify for the hardship exemption. The PHA may require updated verification based on the family’s current circumstances. Additional extension may be granted on a case-by-case basis provided the family continues to request extensions prior to the end of each hardship exemption period. Families must report if the circumstances that made the family eligible for the hardship exemption are no longer applicable. At any time, the PHA may terminate the hardship exemption if the PHA determines that the family no longer qualifies for the exemption.
6B-III.H. PERMISSIVE DEDUCTIONS [24 CFR 5.611(B)(1)(II)] The PHA may adopt additional permissive deductions from annual income if they establish a policy in the administrative plan. Permissive deductions are additional, optional deductions that may be applied to annual income. As with mandatory deductions, permissive deductions must be based on need or family circumstance and deductions must be designed to encourage selfsufficiency or other economic purpose. If the PHA offers permissive deductions, they must be granted to all families that qualify for them and should complement existing income exclusions and deductions [PH Occ GB, p. 128]. Permissive deductions may be used to incentivize or encourage self-sufficiency and economic mobility.

A PHA that adopts such deductions must have sufficient funding to cover the increased housing assistance payment cost of the deductions. A PHA will not be eligible for an increase in HCV renewal funding for subsidy costs resulting from such deductions.

PHA Policy
The PHA has opted not to use permissive deductions.

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Unlimited copies may be made for internal use. Page 6B-64 PART IV: CALCULATING FAMILY SHARE AND PHA SUBSIDY
6B-IV.A. OVERVIEW OF RENT AND SUBSIDY CALCULATIONS
TTP Formula [24 CFR 5.628]
HUD regulations specify the formula for calculating the total tenant payment (TTP) for an assisted family. TTP is the highest of the following amounts, rounded to the nearest dollar:
x 30 percent of the family’s monthly adjusted income (adjusted income is defined in Part II) x 10 percent of the family’s monthly gross income (annual income, as defined in Part I, divided by 12)
x The welfare rent (in as-paid states only)
x A minimum rent between $0 and $50 that is established by the PHA The PHA has authority to suspend and exempt families from minimum rent when a financial hardship exists, as defined in section 6-IV.B.

The amount that a family pays for rent and utilities (the family share) will never be less than the family’s TTP but may be greater than the TTP depending on the rent charged for the unit the family selects.

Welfare Rent [24 CFR 5.628]
PHA Policy
Welfare rent does not apply in this locality.

Minimum Rent [24 CFR 5.630]
PHA Policy
The minimum rent for this locality is $50.00.

Family Share [24 CFR 982.305(a)(5)]
If a family chooses a unit with a gross rent (rent to owner plus an allowance for tenant-paid utilities) that exceeds the PHA’s applicable payment standard: (1) the family will pay more than the TTP, and (2) at initial occupancy the PHA may not approve the tenancy if it would require the family share to exceed 40 percent of the family’s monthly adjusted income. The income used for this determination must have been verified no earlier than 60 days before the family’s voucher was issued. (For a discussion of the application of payment standards, see section 6-IV.C.)
PHA Subsidy [24 CFR 982.505(b)]
The PHA will pay a monthly housing assistance payment (HAP) for a family that is equal to the lower of (1) the applicable payment standard for the family minus the family’s TTP or (2) the gross rent for the family’s unit minus the TTP. (For a discussion of the application of payment standards, see section 6-IV.C.)

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Unlimited copies may be made for internal use. Page 6B-65 Utility Reimbursement [24 CFR 982.514(b); 982.514(c)]
When the PHA subsidy for a family exceeds the rent to owner, the family is due a utility reimbursement. HUD permits the PHA to pay the reimbursement to the family or directly to the utility provider.

PHA Policy
The PHA will make utility reimbursements to the family.

The PHA may make all utility reimbursement payments to qualifying families on a monthly basis or may make quarterly payments when the monthly reimbursement amount is $15.00 or less.

Reimbursements must be made once per calendar-year quarter and must be prorated if the family leaves the program in advance of its next quarterly reimbursement. The PHA must also adopt hardship policies for families for whom receiving quarterly reimbursement would create a financial hardship.

PHA Policy
The PHA will generally make utility reimbursements to the family, but in some instances may elect to directly pay the utility provider.

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Unlimited copies may be made for internal use. Page 6B-66 6B-IV.B. FINANCIAL HARDSHIPS AFFECTING MINIMUM RENT [24 CFR 5.630] PHA Policy
The financial hardship rules described below does apply in this jurisdiction because the PHA has established a minimum rent of $50.00.

Overview
If the PHA establishes a minimum rent greater than zero, the PHA must grant an exemption from the minimum rent if a family is unable to pay the minimum rent because of financial hardship.

The financial hardship exemption applies only to families required to pay the minimum rent. If a family’s TTP is higher than the minimum rent, the family is not eligible for a hardship exemption. If the PHA determines that a hardship exists, the family share is the highest of the remaining components of the family’s calculated TTP.

HUD-Defined Financial Hardship
Financial hardship includes the following situations:
(1) The family has lost eligibility for or is awaiting an eligibility determination for a federal, state, or local assistance program. This includes a family member who is a noncitizen lawfully admitted for permanent residence under the Immigration and Nationality Act who would be entitled to public benefits but for Title IV of the Personal Responsibility and Work Opportunity Act of 1996.

PHA Policy
A hardship will be considered to exist only if the loss of eligibility has an impact on the family’s ability to pay the minimum rent.

For a family waiting for a determination of eligibility, the hardship period will end as of the first of the month following: (1) implementation of assistance, if approved, or (2) the decision to deny assistance. A family whose request for assistance is denied may request a hardship exemption based upon one of the other allowable hardship circumstances. (2) The family would be evicted because it is unable to pay the minimum rent.

PHA Policy
For a family to qualify under this provision, the cause of the potential eviction must be the family’s failure to pay rent to the owner or tenant-paid utilities. (3) Family income has decreased because of changed family circumstances, including the loss of employment.
(4) A death has occurred in the family.

PHA Policy
In order to qualify under this provision, a family must describe how the death has created a financial hardship (e.g., because of funeral-related expenses or the loss of the

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Unlimited copies may be made for internal use. Page 6B-67 family member’s income).
(5) The family has experienced other circumstances determined by the PHA.

PHA Policy
The PHA has not established any additional hardship criteria.

Implementation of Hardship Exemption
Determination of Hardship
When a family requests a financial hardship exemption, the PHA must suspend the minimum rent requirement beginning the first of the month following the family’s request.

The PHA then determines whether the financial hardship exists and whether the hardship is temporary or long-term.

PHA Policy
The PHA defines temporary hardship as a hardship expected to last 90 days or less.

Long-term hardship is defined as a hardship expected to last more than 90 days.

When the minimum rent is suspended, the family share reverts to the highest of the remaining components of the calculated TTP. The example below demonstrates the effect of the minimum rent exemption.

Example: Impact of Minimum Rent Exemption
Assume the PHA has established a minimum rent of $50.

Family Share – No Hardship Family Share – With Hardship $0
$15
N/A
$50
30% of monthly adjusted income
10% of monthly gross income
Welfare rent
Minimum rent
$0
$15
N/A
$50
30% of monthly adjusted income
10% of monthly gross income
Welfare rent
Minimum rent
Minimum rent applies.

TTP = $50
Hardship exemption granted.

TTP = $15
PHA Policy
To qualify for a hardship exemption, a family must submit a request for a hardship exemption in writing. The request must explain the nature of the hardship and how the hardship has affected the family’s ability to pay the minimum rent. For LEP participants, the PHA will provide appropriate language assistance in submitting this written request, in accordance with the PHA’s LEP Plan.

The PHA will make the determination of hardship within 30 calendar days.

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If the PHA determines there is no financial hardship, the PHA will reinstate the minimum rent and require the family to repay the amounts suspended.

PHA Policy
The PHA will require the family to repay the suspended amount within 30 calendar days of the PHA’s notice that a hardship exemption has not been granted.

Temporary Hardship
If the PHA determines that a qualifying financial hardship is temporary, the PHA must suspend the minimum rent for the 90-day period beginning the first of the month following the date of the family’s request for a hardship exemption.

At the end of the 90-day suspension period, the family must resume payment of the minimum rent and must repay the PHA the amounts suspended. HUD requires the PHA to offer a reasonable repayment agreement, on terms and conditions established by the PHA. The PHA also may determine that circumstances have changed and the hardship is now a long-term hardship.

PHA Policy
The PHA will enter into a repayment agreement in accordance with the procedures found in Chapter 16 of this plan.

Long-Term Hardship
If the PHA determines that the financial hardship is long-term, the PHA must exempt the family from the minimum rent requirement for so long as the hardship continues. The exemption will apply from the first of the month following the family’s request until the end of the qualifying hardship. When the financial hardship has been determined to be long-term, the family is not required to repay the minimum rent.

PHA Policy
The hardship period ends when any of the following circumstances apply:
(1) At an interim or annual reexamination, the family’s calculated TTP is greater than the minimum rent.
(2) For hardship conditions based on loss of income, the hardship condition will continue to be recognized until new sources of income are received that are at least equal to the amount lost. For example, if a hardship is approved because a family no longer receives a $60/month child support payment, the hardship will continue to exist until the family receives at least $60/month in income from another source or once again begins to receive the child support.
(3) For hardship conditions based upon hardship-related expenses, the minimum rent exemption will continue to be recognized until the cumulative amount exempted is equal to the expense incurred.

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Unlimited copies may be made for internal use. Page 6B-69 6B-IV.C. APPLYING PAYMENT STANDARDS [24 CFR 982.505; 982.503(CB) AND NOTICE PIH 2024-34]
Overview
The PHA’s schedule of payment standards is used to calculate housing assistance payments for HCV families. This section covers the application of the PHA’s payment standards. The establishment and revision of the PHA’s payment standard schedule are covered in Chapter 16.

Payment standard is defined as “the maximum monthly assistance payment for a family assisted in the voucher program (before deducting the total tenant payment by the family)” [24 CFR 982.4(b)].

The payment standard for a family is the lower of (1) the payment standard for the family unit size, which is defined as the appropriate number of bedrooms for the family under the PHA’s subsidy standards [24 CFR 982.4(b)], or (2) the payment standard for the size of the dwelling unit rented by the family.

If the PHA has established an exception payment standard for a designated part of a zip code area or FMR area in accordance with 24 CFR 982.503 and a family’s unit is located in the exception designated area, the PHA must use the appropriate payment standard for the exception area [24 CFR 982.505 (c)(2)].

The PHA is required to pay a monthly housing assistance payment (HAP) for a family that is the lower of (1) the payment standard for the family minus the family’s TTP or (2) the gross rent for the family’s unit minus the TTP.

If during the term of the HAP contract for a family’s unit, the owner lowers the rent, the PHA will recalculate the HAP using the lower of the initial payment standard or the gross rent for the unit [HCV GB, p. 7-8].

Changes in Payment Standards
When the PHA revises its payment standards during the term of the HAP contract for a family’s unit, it will apply the new payment standards in accordance with HUD regulations. Regulations governing increases and decreases in the payment standard have changed, with a required compliance date of December 3, 2024.

Decreases [24 CFR 982.505(c)(3) and Notice PIH 2024-34] For new HAP contracts, the PHA applies the payment standard in effect at the time of HAP contract execution.

The PHA must administer decreases in the payment standard amount for the family in accordance with the PHA policy as described in the administrative plan and apply the policy consistently to all families.

If a PHA changes its payment standard schedule, resulting in a lower payment standard amount, during the term of a HAP contract, the PHA is not required to reduce the payment standard used to calculate subsidy for families under HAP contract as long as the HAP contract

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Unlimited copies may be made for internal use. Page 6B-70 remains in effect [FR Notice 11/16/16]. The PHA must administer decreases in the payment standard amount for the family in accordance with the PHA policy as described in the administrative plan.

However, if Changes effective 12/2/24 and earlier: if the PHA does choose to reduce the payment standard for families currently under HAP contract, the initial reduction to the payment standard may not be applied any earlier than the effective date of the family’s second regular reexamination following the effective date of the decrease in the payment standard amount.

Changes effective 12/3/24 and later: If the PHA does choose to reduce the payment standard for families currently under HAP contract, the initial reduction to the payment standard may not be applied any earlier than two years following the effective date of the decrease in the payment standard and only with proper written notice to the family in accordance with 24 CFR 982.505(c)(3)(iii).

At that point, the PHA may either reduce the payment standard to the current amount in effect on the PHA’s payment standard schedule, or may reduce the payment standard to another amount that is higher than the normally applicable amount on the schedule. The PHA may also establish different policies for designated areas within their jurisdiction (e.g., different zip code areas).

In any case, the PHA must provide the family with at least 12 months’ notice that the payment standard is being reduced before the effective date of the change. In the written notice, the PHA must state the new payment standard amount, explain that the family’s new payment standard amount will be the greater of the amount listed in the current written notice or the new amount (if any) on the PHA’s payment standard schedule at the end of the 12-month period, and make clear where the family will find the PHA’s payment standard schedule. The PHA’s policy on decreases in the payment standard during the term of the HAP contract apply to all families under HAP contract at the time of the effective date of the decrease in the payment standard within the designated area.

PHA Policy
If the PHA changes its payment standard schedule to a lower amount during the term of a HAP contract, it will not reduce the payment standard used to calculate subsidy for families under the contract, unless budget constraints require a reduction in the number of vouchers issued.

Increases [24 CFR 982.505(c)(4) and Notice PIH 2024-34] For new HAP contracts, the PHA applies the payment standard in effect at the time of HAP contract execution.

Changes effective 12/2/24 and earlier: If the payment standard is increased during the term of the HAP contract, the increased payment standard will be used to calculate the monthly

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Unlimited copies may be made for internal use. Page 6B-71 housing assistance payment for the family beginning on the effective date of the family’s first regular reexamination on or after the effective date of the increase in the payment standard.

Families requiring or requesting interim reexaminations will not have their HAP payments calculated using the higher payment standard until their next annual reexamination [HCV GB, p. 7-8].

Changes effective 12/3/24 and later: If the payment standard is increased during the term of the HAP contract, the increased payment standard will be applied no later than the earliest of:
x The effective date of an increase in the gross rent that would result in an increase in the family share;
x The family’s first regular or interim reexamination; or x One year following the effective date of the increase in the payment standard amount.

The PHA may adopt a policy to apply a payment standard increase at any time earlier than the date calculated above as long as the policy is included in the administrative plan and applied consistently to all families [24 CFR 982.505(c)(5)].

PHA Policy
The PHA will not adopt payment standard increases earlier than the date required by the regulations.

Changes in Family Unit Size (Voucher Size) [24 CFR 982.505(c)(6) and Notice PIH 2024-34] Changes effective 12/3/24 and later: Irrespective of any increase or decrease in the payment standard, if the family unit size increases or decreases during the HAP contract term, the new family unit size must be used to determine the payment standard for the family beginning at the family’s first regular reexamination following the change in family unit size.

Changes effective 12/3/24 and later: Irrespective of any increase or decrease in the payment standard, if the family unit size increases or decreases during the HAP contract term, the new family unit size may be used to determine the payment standard immediately but no later than the family’s first regular reexamination following the change in family unit size.

PHA Policy
If the family unit size (voucher size) changes during the term of a HAP contract, the new family unit size will be used to determine the payment standard at the family’s first regular reexamination following the change in family unit size.

Moves
If the family moves to a new unit, or a new HAP contract is executed due to changes in the lease (even if the family remains in place) the current payment standard applicable to the family will be used when the new HAP contract is processed

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Packet Pg. 680 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-72 Reasonable Accommodation [24 CFR 982.503(d)(5)]
If a family requires a higher payment standard as a reasonable accommodation for a family member who is a person with disabilities, the PHA is allowed to establish a higher payment standard for the family of not more than 120 percent of the published FMR. without HUD approval or prior notification to HUD. A PHA may establish a payment standard greater than 120 percent of the applicable FMR as a reasonable accommodation in accordance with 24 CFR part 8, after requesting and receiving HUD approval. See Chapter 16 for more information.

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Packet Pg. 681 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-73 6B-IV.D. APPLYING UTILITY ALLOWANCES [24 CFR 982.517]
Overview
A PHA-established utility allowance schedule is used in determining family share and PHA subsidy. A family's utility allowance is determined by the size of dwelling unit leased by a family or the voucher unit size for which the family qualifies using PHA subsidy standards, whichever is the lowest of the two. See Chapter 5 for information on the PHA’s subsidy standards.

For policies on establishing and updating utility allowances, see Chapter 16.

Flat Fees [24 CFR 982.517(b)(2)(iii)]
The PHA may base its utility allowance payments on actual flat fees charged by an owner for utilities that are billed directly by the owner, but only if the flat fee charged by the owner is no greater than the PHA’s applicable utility allowance for the utilities covered by the fee. If the owner charges a flat fee for some but not all utilities, the PHA must pay a separate allowance for any tenant-paid utilities not covered in the flat fee.

PHA Policy
The PHA will not base utility allowance payments on flat fees charged by the owner.

PBV Developments [24 CFR 982.517(b)(2)(iv)]
If a tenant-based voucher holder resides in a project with project-based voucher (PBV) units and the PBV units use a site-specific utility allowance in accordance with PBV regulations, the PHA must use the project-specific utility allowance schedule.

Reasonable Accommodation and Individual Relief
On request from a family that includes a person with disabilities, the PHA must approve a utility allowance which is higher than the applicable amount on the utility allowance schedule if a higher utility allowance is needed as a reasonable accommodation to make the program accessible and usable by the family member with a disability [24 CFR 982.517(e)]. (See Chapter 2 for policies regarding the request and approval of reasonable accommodations.) Further, the PHA may grant requests for individual relief from charges in excess of the utility allowance on reasonable grounds, such as special factors not within control of the resident, as the PHA deems appropriate. The family must request the higher allowance and provide the PHA an explanation of the need for individual relief and an explanation about the amount of additional allowance required [see HCV GB, p. 18-8].

PHAs should develop criteria for granting individual relief, notify residents about the availability of individual relief, and notify participants about the availability of individual relief programs (sometimes referred to as “Medical Baseline discounts”) offered by the local utility company.

PHA Policy
The family must request the higher allowance and provide the PHA with information about the amount of additional allowance required.

The PHA will consider the following criteria as valid reasons for granting individual relief:

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Packet Pg. 682 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-74 The family’s consumption was mistakenly portrayed as excessive due to defects in the meter or errors in the meter reading.

The excessive consumption is caused by a characteristic of the unit or ownersupplied equipment that is beyond the family’s control, such as a particularly inefficient refrigerator or inadequate insulation. The allowance should be adjusted to reflect the higher consumption needs associated with the unit until the situation is remedied. The resident should be granted individual relief until the allowance is adjusted.

The excessive consumption is due to special needs of the family that are beyond their control, such as the need for specialized equipment in the case of a family member who is ill, elderly, or who has a disability.

In determining the amount of the reasonable accommodation or individual relief, the PHA will allow a reasonable measure of additional usage as necessary. To arrive at the amount of additional utility cost of specific equipment, the family may provide information from the manufacturer of the equipment, or the family or PHA may conduct an internet search for an estimate of usage or additional monthly cost.

Information on reasonable accommodation and individual relief for charges in excess of the utility allowance will be provided to all families at admission as part of the information on payment standards and utility allowances in the briefing packet. The PHA will also provide information on utility relief programs or medical discounts (sometimes referred to as “Medical Baseline discounts”) that may be available through local utility providers.

At its discretion, the PHA may reevaluate the need for the increased utility allowance at any regular reexamination.

If the excessive consumption is caused by a characteristic of the unit or PHA-supplied equipment that is beyond the family’s control, such as a particularly inefficient refrigerator or inadequate insulation, the individual relief to the resident will cease when the situation is remedied.

Utility Allowance Revisions
At reexamination, the PHA must use the current utility allowance schedule [HCV GB, p. 18-8].

PHA Policy
Revised utility allowances will be applied to a family’s rent and subsidy calculations at the first annual reexamination that is effective after the allowance is adopted. 6B-IV.E. PRORATED ASSISTANCE FOR MIXED FAMILIES [24 CFR 5.520] HUD regulations prohibit assistance to ineligible family members. A mixed family is one that includes at least one U.S. citizen or eligible immigrant and any number of ineligible family members. The PHA must prorate the assistance provided to a mixed family. The PHA will first

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Packet Pg. 683 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-75 determine assistance as if all family members were eligible and then prorate the assistance based upon the percentage of family members that actually are eligible. For example, if the PHA subsidy for a family is calculated at $500 and two of four family members are ineligible, the PHA subsidy would be reduced to $250.

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Packet Pg. 684 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-76 EXHIBIT 6B-1: ANNUAL INCOME FULL DEFINITION
24 CFR 5.609
(a) Annual income includes, with respect to
the family:
(1) All amounts, not specifically excluded in
paragraph (b) of this section, received from all
sources by each member of the family who is
18 years of age or older or is the head of
household or spouse of the head of
household, plus unearned income by or on
behalf of each dependent who is under 18
years of age, and
(2) When the value of net family assets
exceeds the HUD-published threshold amount
$50,000 (which amount HUD will adjust
annually in accordance with the Consumer
Price Index for Urban Wage Earners and
Clerical Workers) and the actual returns from
a given asset cannot be calculated, imputed
returns on the asset based on the current
passbook savings rate, as determined by HUD.
(b)Annual income does not include the following:
(1) Any imputed return on an asset when net
family assets total the HUD-published
threshold amount $50,000 or less (which
amount HUD will adjust annually in
accordance with the Consumer Price Index for
Urban Wage Earners and Clerical Workers)
and no actual income from the net family
assets can be determined.
(2) The following types of trust distributions:
(i) For an irrevocable trust or a revocable trust
outside the control of the family or household
excluded from the definition of net family
assets under § 5.603(b):
(A) Distributions of the principal or corpus of
the trust; and
(B) Distributions of income from the trust
when the distributions are used to pay the
costs of health and medical care expenses for
a minor.
(ii) For a revocable trust under the control of
the family or household, any distributions
from the trust; except that any actual income
earned by the trust, regardless of whether it is
distributed, shall be considered income to the
family at the time it is received by the trust.
(3) Earned income of children under the 18
years of age.
(4) Payments received for the care of foster
children or foster adults, or State or Tribal
kinship or guardianship care payments.
(5) Insurance payments and settlements for
personal or property losses, including but not
limited to payments through health insurance,
motor vehicle insurance, and workers’
compensation.
(6) Amounts received by the family that are
specifically for, or in reimbursement of, the
cost of health and medical care expenses for
any family member.
(7) Any amounts recovered in any civil action
or settlement based on a claim of malpractice,
negligence, or other breach of duty owed to a
family member arising out of law, that
resulted in a member of the family becoming
disabled.
(8) Income of a live-in aide, foster child, or
foster adult as defined in §§ 5.403 and 5.603,
respectively.
(9)
(i) Any assistance that section 479B of the
Higher Education Act of 1965, as amended (20
U.S.C. 1087uu), requires be excluded from a
family’s income; and

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Packet Pg. 685 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-77 (ii) Student financial assistance for tuition,
books, and supplies (including supplies and
equipment to support students with learning
disabilities or other disabilities), room and
board, and other fees required and charged to
a student by an institution of higher education
(as defined under Section 102 of the Higher
Education Act of 1965 (20 U.S.C. 1002)) and,
for a student who is not the head of
household or spouse, the reasonable and
actual costs of housing while attending the
institution of higher education and not
residing in an assisted unit.
(A) Student financial assistance, for purposes
of this paragraph (9)(ii), means a grant or
scholarship received from— (
1) The Federal government;
(2) A State, Tribe, or local government;
(3) A private foundation registered as a
nonprofit under 26 U.S.C. 501(c)(3);
(4) A business entity (such as corporation,
general partnership, limited liability company,
limited partnership, joint venture, business
trust, public benefit corporation, or nonprofit
entity); or
(5) An institution of higher education.
(B) Student financial assistance, for purposes
of this paragraph (9)(ii), does not include—
(1) Any assistance that is excluded pursuant to
paragraph (b)(9)(i) of this section;
(2) Financial support provided to the student
in the form of a fee for services performed
(e.g., a work study or teaching fellowship that
is not excluded pursuant to paragraph (b)(9)(i)
of this section); (
3) Gifts, including gifts from family or friends;
or
(4) Any amount of the scholarship or grant
that, either by itself or in combination with
assistance excluded under this paragraph or
paragraph (b)(9)(i), exceeds the actual
covered costs of the student. The actual
covered costs of the student are the actual
costs of tuition, books and supplies (including
supplies and equipment to support students
with learning disabilities or other disabilities),
room and board, or other fees required and
charged to a student by the education
institution, and, for a student who is not the
head of household or spouse, the reasonable
and actual costs of housing while attending
the institution of higher education and not
residing in an assisted unit. This calculation is
described further in paragraph (b)(9)(ii)€ of
this section.
(C) Student financial assistance, for purposes
of this paragraph (b)(9)(ii) must be:
(1) Expressly for tuition, books, room and
board, or other fees required and charged to
a student by the education institution;
(2) Expressly to assist a student with the costs
of higher education; or
(3) Expressly to assist a student who is not the
head of household or spouse with the
reasonable and actual costs of housing while
attending the education institution and not
residing in an assisted unit.
(D) Student financial assistance, for purposes
of this paragraph (b)(9)(ii), may be paid
directly to the student or to the educational
institution on the student’s behalf. Student
financial assistance paid to the student must
be verified by the responsible entity as
student financial assistance consistent with
this paragraph (b)(9)(ii).
(E) When the student is also receiving
assistance excluded under paragraph (b)(9)(i)
of this section, the amount of student

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Packet Pg. 686 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-78 financial assistance under this paragraph
(b)(9)(ii) is determined as follows:
(1) If the amount of assistance excluded under
paragraph (b)(9)(i) of this section is equal to
or exceeds the actual covered costs under
paragraph (b)(9)(ii)(B)(4) of this section, none
of the assistance described in this paragraph
(b)(9)(ii) of this section is considered student
financial assistance excluded from income
under this paragraph (b)(9)(ii)(E).
(2) If the amount of assistance excluded under
paragraph (b)(9)(i) of this section is less than
the actual covered costs under paragraph
(b)(9)(ii)(B)(4) of this section, the amount of
assistance described in paragraph (b)(9)(ii) of
this section that is considered student
financial assistance excluded under this
paragraph is the lower of:
(i) the total amount of student financial
assistance received under this paragraph
(b)(9)(ii) of this section, or
(ii) the amount by which the actual covered
costs under paragraph (b)(9)(ii)(B)(4) of this
section exceeds the assistance excluded
under paragraph (b)(9)(i) of this section.
(10) Income and distributions from any
Coverdell education savings account under
section 530 of the Internal Revenue Code of
1986 or any qualified tuition program under
section 529 of such Code; and income earned
by government contributions to, and
distributions from, “baby bond” accounts
created, authorized, or funded by Federal,
State, or local government.
(11) The special pay to a family member
serving in the Armed Forces who is exposed to
hostile fire.
(12)
(i) Amounts received by a person with a
disability that are disregarded for a limited
time for purposes of Supplemental Security
Income eligibility and benefits because they
are set aside for use under a Plan to Attain
Self-Sufficiency (PASS);
(ii) Amounts received by a participant in other
publicly assisted programs which are
specifically for or in reimbursement of out-ofpocket expenses incurred (e.g., special equipment, clothing, transportation, child
care, etc.) and which are made solely to allow
participation in a specific program;
(iii) Amounts received under a resident service
stipend not to exceed $200 per month. A
resident service stipend is a modest amount
received by a resident for performing a
service for the PHA or owner, on a part-time
basis, that enhances the quality of life in the
development.
(iv) Incremental earnings and benefits
resulting to any family member from
participation in training programs funded by
HUD or in qualifying Federal, State, Tribal, or
local employment training programs
(including training programs not affiliated
with a local government) and training of a
family member as resident management staff.

Amounts excluded by this provision must be
received under employment training
programs with clearly defined goals and
objectives and are excluded only for the
period during which the family member
participates in the employment training
program unless those amounts are excluded
under paragraph (b)(9)(i) of this section.
(13) Reparation payments paid by a foreign
government pursuant to claims filed under
the laws of that government by persons who
were persecuted during the Nazi era.
(14) Earned income of dependent fulltime
students in excess of the amount of the
deduction for a dependent in § 5.611.

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Packet Pg. 687 Attachment: Draft Administrative Plan FY 2025-2026 2 (6708 : SMHA 5-Year Plan / SMHA PHA Plan) © Copyright 20243 Nan McKay & Associates, Inc.

Unlimited copies may be made for internal use. Page 6B-79 (15) Adoption assistance payments for a child
in excess of the amount of the deduction for a
dependent in § 5.611.
(16) Deferred periodic amounts from
Supplemental Security Income and Social
Security benefits that are received in a lump
sum amount or in prospective monthly
amounts, or any deferred Department of
Veterans Affairs disability benefits that are
received in a lump sum amount or in
prospective monthly amounts.
(17) Payments related to aid and attendance
under 38 U.S.C. 1521 to veterans in need of
regular aid and attendance.
(18) Amounts received by the family in the
form of refunds or rebates under State or
local law for property taxes paid on the
dwelling unit.
(19) Payments made by or authorized by a
State Medicaid agency (including through a
managed care entity) or other State or
Federal agency to a family to enable a family
member who has a disability to reside in the
family’s assisted unit. Authorized payments
may include payments to a member of the
assisted family through the State Medicaid
agency (including through a managed care
entity) or other State or Federal agency for
caregiving services the family member
provides to enable a family member who has
a disability to reside in the family’s assisted
unit.
(20) Loan proceeds (the net amount disbursed
by a lender to or on behalf of a borrower,
under the terms of a loan agreement)
received by the family or a third party (e.g.,
proceeds received by the family from a
private loan to enable attendance at an
educational institution or to finance the
purchase of a car).
(21) Payments received by Tribal members as
a result of claims relating to the
mismanagement of assets held in trust by the
United States, to the extent such payments
are also excluded from gross income under
the Internal Revenue Code or other Federal
law.
(22) Amounts that HUD is required by Federal
statute to exclude from consideration as
income for purposes of determining eligibility
or benefits under a category of assistance
programs that includes assistance under any
program to which the exclusions set forth in
paragraph (b) of this section apply. HUD will
publish a notice in the Federal Register to
identify the benefits that qualify for this
exclusion. Updates will be published when
necessary.
(23) Replacement housing “gap” payments
made in accordance with 49 CFR part 24 that
offset increased out of pocket costs of
displaced persons that move from one
federally subsidized housing unit to another
Federally subsidized housing unit. Such
replacement housing “gap” payments are not
excluded from annual income if the increased
cost of rent and utilities is subsequently
reduced or eliminated, and the displaced
person retains or continues to receive the
replacement housing “gap” payments.
(24) Nonrecurring income, which is income
that will not be repeated in the coming year
based on information provided by the family.